Building

Connecting

Accelerating

BT Group plc

Annual Report 2024

Every connection

tells a story

The connections you make

create a picture of modern

life in the digital world.

30m

of you used our

services as customers.

200m

of your devices were

connected to our network.

94,722

Petabytes consumed

One Petabyte is one million Gigabytes.

With94,722Pb

, you could stream ‘Barbie’

over7.2billion times. In 4K quality.

a Petabytes consumed is for calendar year 2023.

7.2+ billion

19,500

Further

We have more than 19,500 mobile sites across the UK,

including 1,350 new mast sites built from scratch

since2013. That’s abrand new site every three days

overthepast decade.

60,000mi

Adding over 60,000 square

miles of 4G mobile coverage

across the UK since 2013.

That’s more than 60% of

theUK.

121%

Faster

Our 5G infrastructure has increased average

downloadspeed by 121% since 2019.

1.5bn

Talking the talk

You spent 1.5 billion minutes talking on voice and video

calls with our EE mobile network in the last ten years.

Thatis nearly 3,000 years of talking.

~35Tbps

A network record peak

You helped create more of these

recordpeaksinnetwork traffic than ever.

Online annual review

To explore a year in the life of

our customers and colleagues,

visit our online review.

bt.com/annualreview

What connects us

defines us

Our network enables

millions of customers

tomake trillions of

connections between

thepeople, places and

things that matter most

tothem.

Each connection carries data. And it

creates data too. We’ve collated ithere

to reveal a year in the life ofcustomers

who’ve never relied on usmore.

The video calls that bring families

together. The unbroken streams of

showsand sports. The games, apps,

deliveries and chats.

Fixed or mobile, at home, work or

play,our growing network makes these

connections happen. And we have the

storytelling stats to show it.

Mobile coverage

We operate more than 19,500 mobile sites across the UK,

including 1,350 brand new mast sites built since 2013.

That’s a new mobile site being built every three days for

the past decade to elevate the UK’s mobile connectivity.

99%

Our 4G population coverage in each

individual nation now stands at:

England (99%), Northern Ireland (98%),

Scotland (99%), and Wales (98%)

75%

Our 5G population coverage in each

individual nation now stands at:

England (77%), Northern Ireland (29%),

Scotland (73%), and Wales (77%)

Fibre coverage

We’re building our new full fibre network across the UK, from rural

villages to city centres, with 13.8m premises covered, equivalent

toover 40% of UK homes and businesses already able to access

ultrafast, ultra-reliable broadband. We’re reaching more properties

every day – including one million just in the final quarter.

40%

Our fibre geographic coverage in each

individual nation now stands at:

England (10.9m), Northern Ireland (0.8m),

Scotland (1.2m), and Wales(0.9m)

This map is a visual representation of network

coverageandshould not be taken as 100% accurate.

Revenue

£20.8bn 1%

(FY23: £20.7bn)

Profit before tax

£1.2bn (31)%

(FY23: £1.7bn)

Adjusted

EBITDA

£8.1bn 2%

(FY23: £7.9bn)

Cash flow from operating activities

£6.0bn (11)%

(FY23: £6.7bn)

Normalised free cash flow

£1.3bn (4)%

(FY23: £1.3bn)

Basic earnings per share

8.7p (55)%

(FY23: 19.4p)

Capital expenditure

£4.9bn (3)%

(FY23: £5.1bn)

Strategic report

A message from our Chairman 2

A message from our Chief Executive 4

Executive Committee 8

Our business model 10

Trends shaping our industry and business 16

Our strategic framework 18

Progress against our strategic framework 20

Our people 30

Our Manifesto 34

Our stakeholders 40

Non-financial and sustainability information statement 46

Our key performance indicators (KPIs) 48

Group performance 50

Regulatory update 58

A message from the Chair of Openreach 60

Risk management 61

Our principal risks and uncertainties 63

Task Force on Climate-related Financial Disclosures 71

Viability statement 81

Corporate governance report 83

Financial statements 131

Additional information 231

This Strategic report was approved by the Board on 15 May 2024

and signed on its behalf by the Chairman.

Adam Crozier

Chairman

15 May 2024

You can find our cautionary statement on forward-looking

statements on page 234.

Pages 1 to 82 are the Strategic report. It includes our

business model, progress against our strategic framework,

our key performance indicators, group performance and our

principal risks and uncertainties.

You can find our Corporate governance report on pages 83

to 130. It includes the Directors’ report and information on

our directors’ remuneration.

When we say ‘BT Group’ and ‘the group’ in this document we

mean BT Group plc – made up of our subsidiaries, customer-facing

units and internal corporate units. When we say ‘FY24’ we mean

the financial year that ended on 31 March 2024, and we use the

same approach for any other years.

Look out for these throughout the report

Reference to another page in the report

Reference to further reading online

BT Group plc Annual Report 2024

1 Strategic report

Contents

a Adjusted EBITDA is group profit or loss before specific items, net finance

expense, taxation, depreciation and amortisation and share of post tax

profits or losses of associates and joint ventures. See page 232.

b We define normalised free cash flow on page 232.

Connecting the UK

whiletransforming

ourbusiness.

BT Group has made good progressin

the last few years andyet we still

have an enormoustransformation

aheadofus if we’re to truly

modernise the way we operate for

the benefit of all our stakeholders.

As our investment expenditure

reduces and as Allison’s leadership

brings renewed focus and

accelerated delivery, I’m confident

that the long-term prospects for

BT Group are extremely strong.

Adam Crozier

Chairman

The connections that we

provideare more critical

thanever, and our customers’

needs and demands are

constantlyevolving.

Keeping the UK’s homes, public services and businesses

connected places a huge responsibility on BT Group –

one that we’ve continued to meet successfully in

FY24, while sustainably growing our business and

continuing to transform our operations.

We’ve also achieved this while facing significant

change across the organisation, including the

appointment of our new Chief Executive.

BT Group plc Annual Report 2024

2 Strategic report

A message from our Chairman

Thank you to Philip

After five years as Chief Executive of BT

Group, Philip Jansen stood down at the

end of January 2024. Philip achieved a

huge amount during his time, most notably

setting our vision to provide full fibre

connections to 25m premises across the

UK by December 2026 – a target we are

well over halfway towards completing.

Philip’s tenure was also marked by a

number of exceptional external challenges.

Covid-19 caused immediate changes to

everyday life and lasting shifts in how

businesses and society operate, and BT

Group successfully adapted to both under

Philip’s leadership. He also steered the

business through the impacts of events

such as the cost-of-living crisis, high

inflation rates and the invasion of Ukraine.

I’d like to take the opportunity to again

thank Philip personally, and on behalf of

the Board, for everything he delivered for

BT Group and the foundation he’s set for

our future success. I wish him all the best

with his future endeavours.

Welcoming Allison

In February 2024, we welcomed Allison

Kirkby as our new Chief Executive. She is a

proven leader, with deep sector experience

and a history of transforming businesses.

Having served as a member of our Board

since 2019, Allison already has a full

understanding of our long-term strategic

objectives. On the following pages, she

sets out how she’s shaping this strategy to

deliver for our customers and stakeholders

better and faster.

This will be achieved by focusing on building

and connecting customers to our networks,

and accelerating the transformation of BT

Group to improve our customer service and

for the benefit of all our stakeholders. The

Board and I look forward to supporting this

agenda and Allison’s leadership in her new

executive capacity.

Moving beyond peak investment

We’ve steadily accelerated the delivery

ofour unprecedented investment

programme, creating the UK’s digital

backbone and enabling growth in its

economy and businesses. Building and

connecting faster hastens the delivery

ofreturns to our shareholders.

FY24 is the year in which we passed the

peak of our capital expenditure on this

programme, enabling us to see greater

normalised free cash flow over the coming

years. This gives us confidence to increase

the full year dividend to 8.0 pence per

share while reaffirming our progressive

dividend policy for our loyal investors.

Enabling better

outcomesfortheUK

While change both inside and outside

BTGroup is now constant, our purpose

endures: We Connect for Good. Our

networkinvestments, alongside our

Manifesto commitments to deliver

responsible, inclusive and sustainable

technology, create a foundation for greater

inclusivity and wider benefits tosociety.

We’re committed to ensuring that the

networks we provide, and the essential

services they enable, are accessed and

utilised as widely as possible across the UK. In

2021, we set an ambitious goal to reach 25m

people in the UK with digital skills by March

2026, and we’re on track to hit that target.

We also continue to move forward on our

wider sustainability goals, with a commitment

to build towards a circular BT Group by the

end of March 2030, and a circular tech

ecosystem by end of March 2040.

We’ve continued to make clear progress

onreducing our environmental impact,

witha61% reduction in operational carbon

emissions intensity (compared to FY17

levels) – but we want to go further too, both

in our own operations but also within the

wider ecosystem we enable. That’s why

we’veset a target to achieve net zero carbon

emissions in our operations by the end of

March 2031, and for supply chain and

customer carbon emissions by the end

ofMarch 2041.

Engaging with our stakeholders

The massive investments we’ve been

making, amid highly challenging economic

conditions and constantly increasing data

usage and demand, have created

inflationary pressures on our business. This

has an unavoidable impact on the prices

we must charge our customers. We know

these rises are never welcome, which is

why it’s critical that the rationale behind

them is fully explained and understood.

Our Consumer business was the first in the

industry to incorporate Ofcom’s latest

proposals on pricing, moving to a ‘pounds

and pence’ structure so that customers

have a clear view of costs across their

contracted period. We’ve also continued

to protect our social tariff and pay as you

go customers from price increases, to

ensure everyone is able to remain online.

We’re engaging with a broad range of

stakeholders, including Ofcom, UK

Government, the Digital Voice Advisory

Board and Telecare Action Board, as we

progress the switch from analogue to

digital landlines. Along with other

communications providers, we paused all

non-voluntary migrations in December

2023, and we now expect to have migrated

all customers off the public switched

telephone network (PSTN) by the end

ofJanuary 2027, allowing us to align the

programme with full fibre broadband

customer upgrades where available. This

timescale will ensure we get this right while

delivering this essential programme to

ensure the long-term resilience of our

networks and services.

Board changes

In January 2024 we welcomed Raphael

Kübler, Chief Operating Officer at

Deutsche Telekom, to our Board.

Raphaelreplaced Adel Al-Saleh as

Deutsche Telekom’s nominated Board

representative, and we look forward to

working with him going forward.

In May of this year we also welcomed Tushar

Morzaria to the Board as an Independent

Non-Executive Director. Tushar brings a

wealth of strategic financial management

experience gained over 25 years of

overseeing transformation programmes and

strengthening risk and control frameworks

incomplex global organisations.

Ian Cheshire and Iain Conn stepped down

from the BT Group Board in July 2023,

with Ruth Cairnie succeeding them in the

roles of both Senior Independent Non-

Executive Director and Chair of the

Remuneration Committee.

I’m confident that the collective expertise

and varied backgrounds of our Board

members mean we have the right range

ofskills and experience to progress BT

Group’s ambitions, while also meeting best

practice and the guidelines set out in our

Board Diversity and Inclusion Policy.

Looking ahead

BT Group has made good progress in

thelast few years and yet we still have an

enormous transformation ahead of us if we

are to truly modernise the way we operate

for the benefit of all our stakeholders.

While we’ve a long way to go, our strategy is

beginning to deliver, creating the next

generation networks that connect the UK,

while seeing clear improvements in

operational efficiency and financial returns.

As our investment expenditure reduces

and as Allison’s leadership brings

renewedfocus and accelerated delivery,

I’m confident that the long-term prospects

for BT Group are extremely strong.

Adam Crozier

Chairman

15 May 2024

BT Group plc Annual Report 2024

3 Strategic report

Sharpening

our focus.

Since her appointment as Chief Executive,

Allison has visited BT Group sites across

theUK,including:

BT Group built and connected

customers to our next generation

networks at record speed and

efficiency over the past year,

while continuing to grow

revenue and EBITDA.

Allison Kirkby

Chief Executive

Watch our CEO reflect on

her first few months in office.

bt.com/annualreview

Full fibre rollout:

now at 13.8m premises

13.8m

Normalised free cash flow:

raising targets to c.£3.0bn by 2030

c.£3.0bn

BT Group plc Annual Report 2024

4 Strategic report

A message from our Chief Executive

Sharpening our focus on being the

best we can be for our customers,

for our shareholders and for the UK.

Early reflections

I’ve spent the last few months meeting as

many of our customers and stakeholders

as possible. Every interaction has

confirmed to me that connectivity is the

lifeblood of the UK’s society and economy.

We provide the digital backbone for the

nation; without us, life as we know it stops.

That might sound dramatic, but it’s true –

and it’s why everything we do has to be

focused on supporting the customers who

rely on us and living up to our purpose, to

connect for good.

I’ve now visited close to 20 BT Group sites

in the UK to meet with colleagues across

our operations, and it’s been fantastic to

see their commitment and passion for

what we do. As they’re the people who

connect with our customers most often,

hearing their perspectives on our

strengths, opportunities and challenges

has also been invaluable as I’ve shaped

mythinking.

These conversations have deepened my

appreciation of the fantastic assets that

make us unique. We’re unrivalled in our

experience of operating critical national

infrastructure, our breadth of private and

public sector customer relationships, our

research and development credentials,

ourpartnerships with the world’s leading

technology firms, and above all our brilliant

people who underpin everything we do.

We must harness these strengths as we

move into the next phase of BT Group’s

transformation. We’re over the peak of

ourinvestment in fibre-to-the-premises

(‘FTTP’ or ‘full fibre’); take-up of 5G and

FTTP is growing; and we’re seeing higher

customer satisfaction across the business

as our networks and services provide ever-

improving experiences. But we can and

must go faster in utilising the full power of

our networks. We’ll do this by sharpening

our focus on being the best we can be for

our customers, for our shareholders and

fortheUK.

Our financial performance

Over the past year we delivered a solid

operating and financial performance, with

growth in both adjusted revenue and

EBITDA. We passed peak capex on our

fullfibre broadband rollout and achieved

£3bn of annualised cost savings a

yearahead of schedule.

This means we’ve now reached the

inflection point where we emerge from

themost capital-intensive phase of our

investment programme. It also gives us the

confidence to provide new guidance that

significantly increases our short-term cash

flow and sets out a path to more than

double our normalised free cash flow over

the next five years. This enhanced cash

flow allows us to increase our dividend

forFY24 by 3.9% to 8.0 pence per share.

We’re also setting an additional £3bn

ofgross annualised cost savings to be

reached by the end of FY29.

I know BT Group’s share price has

underperformed in recent years, but we

now have a clear, positive path that aims to

drive significant value for all stakeholders

going forward.

Connecting the UK

Our full fibre rollout has delivered the UK’s

largest private national infrastructure

programme, on time and on budget. It

willdeliver huge benefits to the UK, with

nationwide full fibre broadband predicted

to increase national GDP by £72bn – or

about 2% – by 2030.

We’ve built at record speed and efficiency

this past year, with an additional 3.5m

premises passed, taking us to 13.8m

premises covered – equivalent to well over

40% of UK homes. In fact, we’re currently

the fastest builder of fibre anywhere in

Europe, and at a lower cost than our major

competitors in the UK. More importantly,

we’re also seeing industry-leading

customer take up of our FTTP networks

at34% – and this is even stronger where

we built two or more years ago, with

takeup ofover 50%.

We’ve continued our rollout of 5G, which

now covers 75% of the UK population, and

grown our 5G-ready customer base to

11m. Our overall mobile network has

increased to 88% of the UK by geography,

including new mobile connectivity in 33

London Underground stations. We’re also

the only network provider to have hit our

Shared Rural Network commitment to

Government, bringing mobile coverage to

many parts of the country for the first time.

The customer experience uplift is evident

from the scale of traffic increase that we

see when new locations are connected.

Inremote parts of Scotland, for example,

we have seen this drive new commerce

forbusinesses, enable people to use

onlineservices for the first time, and

connect emergency services in the

mostremote locations.

We’re not just providing brilliant fixed and

mobile networks – we’re also combining

them with the key services our customers

need to live, work, game and learn. For

example, we launched EE Fibre 1.6Gbps,

offering the fastest home broadband

speeds of any major provider, and a new EE

TV app and set-top box, fully integrated

with Apple TV 4K. For businesses, we

announced Global Fabric, which will

enable organisations to seamlessly and

securely connect to multiple clouds and

seize the advantages of digital automation

and artificial intelligence (AI), and we’ve

also launched new customer solutions via

collaborations with companies such as

Google, SAP and Microsoft. These are

reflected in strong customer satisfaction

metrics across the business, and external

accolades such as EE being named as

RootMetrics’ number 1 mobile network

forthe 21st time.

BT Group plc Annual Report 2024

5 Strategic report

Having passed peak

capexon our full fibre

broadband rollout and

achieved our £3bn cost

and service transformation

programme a year ahead

ofschedule, we’ve now

reached the inflection

point on our long-term

strategy.

A message from our Chief Executive continued

Our strategy

forgrowth

To deliver long-term sustainable

growth, we’ve set ourselves five priorities

within our overall strategic framework:

Grow Consumer through

convergedsolutions

Led by EE, Consumer will win more

UKhouseholds by creating deeper relationships

on the back of leadership infull fibre broadband,

5G and convergence.

Capitalise on Business’ unrivalled

assetstorestore growth

Business will help customers grow through

nextgeneration connectivity solutions,

leadingmanaged services and outstanding

customerexperience.

Grow Openreach and get strong

returnson full fibre broadband

Openreach is building the UK’s largest full fibre

broadband network. It will get cost advantage

fromthis scale, upgrade customers to the new

platform, continue to provide industry-leading

service and strengthen all its communications

provider relationships.

Transform our cost base and

bemoreproductive

Across BT Group we will fundamentally change

what we do and how we work. We’ll automate,

digitise and close old systems, processes and

networks. This will cut costs, help us do things

faster and bring better experiences to our

customers and colleagues.

Optimise our company portfolio

andcapital allocation

We will keep strengthening our portfolio by

buying, selling or partnering to push our strategy

forward. We’ll invest in next generation networks

and solutions to meet customers’ needs and

deliver shareholder returns. As we finish rolling

out full fibre broadband, we’ll reduce capital

expenditure by c.£1bn and increase normalised

free cash flow.

BT Group plc Annual Report 2024

6 Strategic report

As we move into the next phase of BT Group’s

transformation, we are sharpening our focus

to be better for our customers and the country,

by accelerating the modernisation of our

operations, and by exploring options to

optimise our global business.

Strategy

This year’s Annual Report provides many

more examples of how our long-term

strategy is delivering: we’re building and

connecting our customers to next

generation networks at pace; we’re

creating standout customer experiences;

and we’re leading the way to a bright and

sustainable future.

While building our next generation IT and

network infrastructure, we’re proactively

moving customers off legacy platforms

that don’t deliver the full benefits of digital

connectivity. We recently completed the

sunsetting of our 3G mobile network, and

we’re continuing to move customers

ontodigital IP-based services. We now

expect to have completed this shift by

January 2027.

We are also radically simplifying our

product and customer journeys by

partnering with leading technology

playersand responsibly adopting new

technologies such as AI to enable

customer benefits and business growth.

In October, we launched our new

integrated EE digital platform to drive

convergence. This included new

connectivity propositions, building on

ourFTTP and 5G leadership, improved

products and services and a simpler, better

set of customer journeys. Overall this is

driving a better customer experience, with

those that have migrated showing a higher

rate of convergence and NPS.

Our strategy is delivering, and when BT

Group wins, the UK wins. But the world

around us is moving at pace, and so must

we. I will set out more on this in the coming

months, but I am already clear that my

ambition for BT Group is to be the UK’s

most trusted connector of people, devices

and machines.

The digital opportunity for the UK

Having spent the last decade running

telecoms companies in Scandinavia, I’ve

seen first-hand how much more digital and

connected those nations are. For example,

Sweden’s equivalent FTTP take-up rate is

over 80%, and they have far greater

adoption of the new services that this

connectivity enables. Digital platforms are

embedded and aligned across all aspects

of everyday life, with online banking,

payment, public services and healthcare

apps used at much higher rates than in

theUK.

What I saw in Sweden is a clear example

ofhow a better-connected society can

unlock huge benefits for both

governments and citizens. As well as

reducing costs, bureaucracy, fraud and

complexity, these digital services also

havegreat potential to help society

decarbonise, and to underpin the creation

of new, technology-based models that

empower businesses to compete in an

increasingly digital, global marketplace.

That’s why I’m committed to ensuring BT

Group plays a key role in helping the UK

catch up and realise the benefits of a fully

connected society. This isn’t something

that’s nice to do – it’s critical to the

UK’sfuture.

Having made huge investments into

UKinfrastructure and services, we must

ensure everyone now benefits from them.

And all the right foundations are in place to

enable this. As well as our own networks,

we have regulatory stability, government

policy that incentivises further investment,

and strong competition spurring all of us in

the industry to keep innovating.

I know from my years of experience in the

industry that the most successful telcos

around the world are national champions

who leverage their history, their assets and

technology leadership to create value for

all. Building on the progress we have made,

and with the transformation of BT Group

now accelerating, we are moving into a

phase where the full potential of our

brands, networks, products and services

can be realised. This will unlock benefits

for UK citizens, businesses and the

economy as a whole – and I personally

can’t wait to start delivering for all our

stakeholders.

Allison Kirkby

Chief Executive

15 May 2024

BT Group plc Annual Report 2024

7 Strategic report

The Executive Committee is

chaired by the Chief Executive.

Sothat there is a single point

ofaccountability, the Chief

Executive (or a delegate)

takesallthe decisions.

The Executive Committee provides

input and recommendations to

help theChief Executive:

– develop group strategy and budget

forBoard approval

– execute the strategy once the

Boardapproves it

– assure the Board on overall

performanceand how we’re

managingrisks.

Allison Kirkby

Chief Executive

Appointed Chief Executive February 2024.

Appointed to the Board March 2019.

From May 2020 until becoming BT Group

Chief Executive, Allison was President &

CEO of Telia Company. She was

previously President & Group CEO of TDC

Group until October 2019, and President

& Group CEO of Tele2 AB from 2015 to

2018, having been Tele2 AB’s Group CFO

from 2014.

Simon Lowth

Chief Financial Officer

Appointed July 2016.

Simon was CFO of BG Group before

thetakeover by Royal Dutch Shell in

February 2016. Before that he was CFO

ofAstraZeneca, and Finance Director

andExecutive Director of ScottishPower.

Simon was also previously a Director of

McKinsey & Company.

Key changes this year

The following changes to the Executive

Committee took place during the year:

– Philip Jansen stood down as Chief

Executive.

– Allison Kirkby was appointed as Chief

Executive.

– Ed Petter stood down as Corporate

Affairs Director on leaving BT Group.

– Tom Engel was appointed Corporate

Affairs Director (Interim).

Harmeen Mehta

Chief Digital and Innovation Officer

Appointed March 2021.

Harmeen is a global leader in incubating

new businesses and creating revenue

streams, with over 25 years’ experience of

digital transformation and running

technology-led businesses.

Before joining BT Group, Harmeen was

group CIO and Head of Cloud & Security

business at Bharti Airtel. Before that, she

was CIO at Bank of America Merrill Lynch,

BBVA and HSBC. Harmeen is a Non-

Executive Director of Lloyds Banking

Group, and a board member of TM Forum.

Tom Engel

Corporate Affairs Director (Interim)

Appointed December 2023.

Before BT Group, Tom held

communications leadership positions at

DFID, DWP and the Natural History

Museum. He has worked in the UK and

South African parliaments and served as

aSpecial Adviser in the Blair government.

Consulting roles have seen Tom work for

awide range of clients, from pop groups to

multinationals, trade bodies to charities.

Whilst based in Hong Kong, he helped to

grow and sell a private PR company.

BT Group plc Annual Report 2024

8 Strategic report

Executive Committee

Marc Allera

CEO, EE and Consumer

Appointed September 2017.

Marc is also Chairman and a BT appointed

Director of the sports joint venture

between BT Group and Warner Bros.

Discovery. Marc was previously CEO of

EE, and EE Chief Commercial Officer

from2011to 2015. He spent ten years at

Three UK as Sales and Marketing Director

and Chief Commercial Officer. Before

that, Marc was General Manager of

SegaUK and Europe. Marc is Chair of

Jagex Limited.

Bas Burger

CEO, Business

Appointed CEO, Business January 2023.

Appointed CEO, Global June 2017.

Bas was formerly President, BT in the

Americas, Global Services. He joined BT

Group in 2008 as CEO Benelux. Before

that he was Executive President and a

management committee member at

Getronics NV, where he ran global sales,

channels and partnerships, developing

the company’s international business. He

was also CEO and Managing Director of

KPN Entercom Solutions.

Sabine Chalmers

General Counsel, Company Secretary

&Director Regulatory Affairs

Appointed General Counsel April 2018.

Appointed Director Regulatory Affairs

and Company Secretary in May and

September 2021 respectively.

Before joining BT Group, Sabine was Chief

Legal and Corporate Affairs Officer and

Company Secretary of Anheuser-Busch

InBev for 12 years. She also held various

legal leadership roles at Diageo. Sabine is

qualified to practise law in England and

Wales and New York State. She is also a

member of the Court of Directors of the

Bank of England.

Howard Watson

Chief Security and Networks Officer

Appointed Chief Technology and

Information Officer February 2016 and

became Chief Technology Officer March

2021. Appointed Chief Security and

Networks Officer September 2022.

Howard’s expanded role puts security at

the core of our business. He was formerly

Chief Architect and Managing Director,

global IT systems and led the technical

teams behind the 2013 BT Sport launch.

Howard joined BT Group in 2011 and

has40 years of telecoms experience.

Thisincludes time at Telewest

Communications (now Virgin Media)

andCartesian, a telecommunications

consultancy and software company.

Athalie Williams

Chief Human Resources Officer

Appointed December 2022.

Before joining BT Group, Athalie was Chief

People Officer for BHP, the world’s largest

mining and resources company. She led

BHP’s organisation, people and culture

transformation agenda and shaped their

industry-leading inclusion and diversity

agenda. Before that Athalie was General

Manager, Cultural Transformation for

National Australia Bank. She also spent

14years leading complex business

transformation and change programmes in

Australia and Asia as a consultant with

Accenture (formerly Andersen Consulting).

Clive Selley

CEO, Openreach

Appointed February 2016.

Clive was formerly CEO, Technology,

Service & Operations, CEO Innovate &

Design and before that President,

Global Services Portfolio & Service

Design. Under the provisions of the

Commitments, Openreach’s CEO

cannot be a member of the Executive

Committee. Clive attends Executive

Committee meetings as appropriate.

BT Group plc Annual Report 2024

9 Strategic report

Our business model

The UK’s

leading

provider

BT Group is the UK’s leading fixed and mobile

communications provider. We build and run

the biggest fixed and mobile networks in

the country.

We operate in both wholesale and retail markets. Our customers

include consumers, small, medium and large businesses, public

sector organisations and other communications providers.

We create value by designing, building, marketing, selling and

supporting network access, connectivity and related products to

customers. We provide many of the fixed, mobile and converged

connectivity solutions integral to modern life. They include

broadband, mobile, TV, networking and IT services. We also

sell other things – like handsets, gaming and insurance – to help

our customers connect, communicate, share, be entertained

and do business.

A significant amount of what we earn goes back into maintaining

and enhancing our fixed and mobile networks, improving

customer service and developing new connectivity solutions –

which bring value to customers and returns to shareholders.

Through paying tax, interest, pension contributions and

shareholder dividends, we contribute financially to a wide

rangeofstakeholders.

BT Group plc Annual Report 2024

10 Strategic report

Our customers

We meet our customers’ needs by giving them outstanding connectivity

and curated solutions – often with our partners.

Our Consumer brands provide mobile,

broadband, landline, and entertainment

services to customers, at home and on the

move. Individuals and households typically

buy our services on monthly, recurring

subscriptions on 12 to 36 month contracts,

or as pay-as-you-go propositions.

For our business and public sector customers

in the UK and around the world, we provide

connectivity, networking, cyber security,

collaboration tools, cloud connectivity and

cloud services. Small and medium-sized

businesses (SMBs) buy our solutions on

12to60 month contracts. Larger businesses

and public sector customers usually buy

managed solutions on multi-year contracts –

helping them protect, run and grow their

organisations and deliver their own digital

transformations.

Communications providers (CPs) buy

wholesale mobile network capabilities,

voice services, broadband, ethernet, and

other connectivity solutions on one month

to five or more year contracts through our

Business unit.

Through Openreach, we provide regulated

wholesale access to our fixed access

network infrastructure on multi-year

contracts to over 700 CPs, including our

own Consumer and Business units.

Our three customer-facing units (CFUs) focus on different segments. Each aims

toprovide outstanding customer experiences through tailored solutions which

generate revenue and build long-term trusted relationships.

How we’re organised

BT Group consists of customer-facing, technology, and corporate units. Our integrated model shares common platforms across our

mobile network, technology, colleagues, and brands to help us to deliver the best results for our stakeholders. To comply with UK

regulations and the Commitments, our Openreach customer-facing unit operates independently.

Consumer

Helps individuals and households

communicate, study, work, learn,

playandbe entertained.

Business

Serves more than 1m organisations in the

UK and 1,000 multinational corporates

and government customers globally.

Openreach

Runs BT Group’s fixed access network

infrastructure autonomously, in line with

the Commitments. It connects millions of

UK homes, businesses, government sites

and mobile masts, while building the next

generation full fibre network.

Technology units (TUs)

Corporate units (CUs)

Our TUs build, maintain and run BT Group’s networks, platforms and

digital assets – except fixed infrastructure assets which Openreach

operates and commercialises. They’re also modernising our business

through innovation, research and development (R&D), helping us be

moreagile, efficient and deliver better outcomes for customers.

OurtwoTUs are:

Our CUs support our other units, driving efficiency across the group

through centralised platforms, capabilities and shared services. They also

facilitate group-level direction setting, governance and coordination –

crucial for aligning business activities. Our four CUs are:

– Finance, Strategy and Business Services

– Human Resources

– Legal, Regulatory Affairs, Compliance and Company Secretarial

– Corporate Affairs.

We’ve announced the creation of a new Strategy and Change unit to

drive the development of BT Group’s corporate strategy and the next

phase of our transformation.

Digital

Delivers our IT and digital platforms

and upgrades the technology

underpinning the products and

services our customers need now

and in the future.

Networks

Designs, builds, runs and secures

the mobile, core and global

networks, enabling seamless

connectivity for BT Group and

allour customers.

BT Group plc Annual Report 2024

11 Strategic report

New EE is here. We are redefining the

wayour customers interact with us for

alltheir connectivity needs, in and

outof thehome. A new brand that

playsabigger, more relevant and more

personalrole in our customers’ lives.

We help people in over 13m homes to

communicate, study, work, learn, play

and be entertained through our EE brand.

13m

Well-established

and trusted

brands

Our brands help us develop and sustain

millions of relationships with a wide range

of customers in a wide range of markets.

BT is our flagship brand for business and

public sector customers in the UK and

globally. EE is our flagship consumer

brand. It will be the go-to place for

converged connectivity, including a

broader range of products and services

alongside connectivity.

BT Group plc Annual Report 2024

12 Strategic report

Our business model continued

Our sources

ofcompetitive

advantage

We’ve got

your back

As a Business unit under the BT brand,

weconnect organisations in around 180

countries worldwide.

We serve over 1m UK and global

organisationswith connectivity solutions

tohelp them run, transform and grow.

1m+

BT Group plc Annual Report 2024

13 Strategic report

With every

fibre

Rolling out our next generation full fibre

network. Openreach serves over 700 CPs.

700+ CPs

BT Group plc Annual Report 2024

14 Strategic report

Our business model:

Our sources of competitive advantage continued

Large

customerbase

We have over 26m consumer and business

connections across our different brands.

That includes nearly 50% of UK

households and more than 1m UK and

global businesses and public sector

organisations. Openreach connects

around 22.9m physical lines for over

700CPs – 43 of whom are signed to our

Equinox 2 deal on our full fibre platform.

The sheer size, scope and breadth of our

customer base sets us apart for building

excellent propositions and winning

partnerships.

Trusted relationships across our EE, BT

andPlusnet brands help us understand

customers’ current and future needs and

create new products to meet them.

Leading

networks

atscale

We build, own and run the UK’s largest

fixed and mobile networks – covering

bothrural and urban areas.

Our fixed network connects homes and

businesses at speeds of up to 1800Mbps.

And we’re also building the UK’s new

digital infrastructure to provide even

better connectivity for all. With the

fastestbuild rate in Europe, more than

13.8m premises have now been passed

with full fibre.

We’re continuing to grow our mobile

network too. Our strong position on

spectrum holdings and access to base

station infrastructure has helped our

4Gnetwork cover over 99% of the

population and 5G reach more than 75%.

People and

presence

Our colleagues help us transform and

achieve our ambitions. We employ over

94,000 people worldwide and almost

74,000 in the UK.

We serve business customers globally.

Ouron-the-ground resources worldwide

include 14 global security operations

centres and four global strategic service

hubs. Our expert Service teams hold

morethan 4,100 professional industry

accreditations as well as over 4,800

technology accreditations. Our

widespread local presence provides

responsive support, underpinned by

theexpertise of our customer-facing

andtechnical teams.

More than 26,000 Openreach engineers

build and run the fixed networks which

power connectivity in UK homes and

businesses. Their skills and commitment

help us improve our networks for better

connectivity and solutions that exceed

customers’ expectations.

Our leading retail presence – more than

430 stores – and over 15,000 support

people help customers get the best

fromour solutions.

Strong partner

and supplier

relationships

We can’t achieve our goals alone. Our

partners and suppliers help us transform

faster and create new solutions that

benefit our customers.

It’s because of strong partnerships that

Openreach can efficiently grow its full fibre

UK network. This collaboration lets us

adjust our operations as we need, flexibly

scaling them up or down.

Partners like Microsoft, Amazon Web

Services and Nokia complement our

products and services. Tightly cooperating

with them makes us more agile, and more

focused on customers.

R&D and

innovation

Innovation has always been the key to

oursuccess – keeping us out in front in

aconstantly changing world.

This year we recognised £726m on R&D.

We also filed 95 patent applications,

bringing our portfolio to 5,385.

Openreach continues to push innovation

boundaries to help cut build and

maintenance costs while improving

network quality. Group-wide research

atAdastral Park led the development of

XGSPON-capable head-ends which will

letOpenreach deliver up to 8Gbs

symmetric services to CPs.

Vast data assets

We use our huge customer, product and

network data sets for insights into what’s

important and where toimprove.

To collect more insights we can act on,

we’ve started to take more advantage of

AIand machine learning.

They’re helping us work smarter and

fasterto develop truly personalised

solutions for customers and operate more

efficiently across the group. And the better

generative AI technologies get, the more

valuable our vast data assets become.

BT Group plc Annual Report 2024

15 Strategic report

Understanding the big trends in our markets helps us seize

opportunities as they happen, and act quickly to reduce

riskstoourbusiness.

Customer and market

Shifting customer

expectations

Customers increasingly expect fairer

treatment from the companies they

engage with. They expect tailored, always

connected digital experiences that work

seamlessly across channels.

They want solutions that combine simple,

reliable, anytime, anywhere connectivity

with transparent pricing, flexibility

andgood value. This is an opportunity

forus tocreate richer and more

equitableexperiences.

Intense competition

We’re facing a wider set of competitors

inmany of our markets, including

established, non-traditional digital and big

tech players. There’s more investment in

fixed and mobile markets. New entrants

are speeding up disruptive trends – like

theblurring of boundaries between

connectivity and digital services.

Economic uncertainty

Today there is widespread economic

uncertainty because of inflation and high

interest rates. This directly affects us

through rising costs and indirectly through

financial strain on our customers, lowering

demand for premium connectivity.

Geopolitical and supply

chain challenges

Our industry is affected by interconnected

geopolitical issues and supply chain issues.

War, conflicts and volatile political

relationships can all disrupt global supply

chains and change rules – which can raise

costs or cause delays and security risks.

The UK Government’s decision to ban

equipment from designated High Risk

Vendors is an example of a geopolitical

factor impacting our business.

Unprecedented demand

for connectivity

In today’s AI era, customers have a bigger

demand for connectivity than ever before.

With more and more devices and

machinesconnected, both individuals

andbusinesses want this connectivity to

bereliable, secure and resilient. This is a

great opportunity for us to deliver that.

BT Group plc Annual Report 2024

16 Strategic report

Trends shaping our industry and business

A record 200 million devices now

connect to our network every day.

200m

Technology

Data, data, data

The data explosion is helping businesses

like ours optimise their networks, develop

personalised services, explore new

revenue streams and improve

customers’experiences.

But it also creates challenges around

privacy, security, data governance and

preventing breaches. That means we’re

having to do a lot more to mitigate the

associated risks.

Artificial

intelligence

As AI and Generative AI get technically

smarter, our industry is finding new uses for

them. For example, AI can help improve

customer experience to boost revenue

orcut costs.

But using AI more creates challenges on

data privacy, algorithm bias and disruption

to organisations and teams – which must

be managed sensitively.

Cyber security

When more people and devices rely on

being connected, coupled with businesses

and governments keeping more sensitive

data, there’s a bigger risk of cyber attacks,

with potentially severe consequences

when something goes wrong. Criminals

and bad state actors are continually

looking for ways to gather information

forfinancial or geopolitical advantage.

Socyber security is vitally important for

usand our customers.

Technology

modernisation

Full fibre broadband and 5G are spreading

quickly across the world – providing

reliable, high speed connectivity. The

Centre for Economics and Business

Research estimates that a full fibre UK will

boost GDP by £72bn and cut our carbon

footprint through reducing commuting.

Our investment will give us a more reliable,

cost-efficient network on which we can

create better customer solutions.

Social

Growing environmental,

social and governance

(ESG) focus

Consumers, businesses, colleagues and

other stakeholders want companies to

beresponsible, inclusive and sustainable,

and act in ways that benefit society and

theplanet.

Concerns about matters like climate

change and inequality shape stakeholders’

behaviour more than ever. Ethical

companies with a clear purpose – who

offersolutions that help customers

address these issues – will benefit.

BT Group plc Annual Report 2024

17 Strategic report

Our strategic framework

Long-term

value creation

Why we exist

We connect for good

This drives everything we do. We help

people, businesses and governments to

harness technology to connect, improve

lives and unlock potential without limits.

We believe in the power of connections –

inpersonal lives, at work and increasingly

between machines and devices.

Who we want

tobecome

The world’s most trusted

connector of people, devices,

andmachines by 2030

We connect millions of customers across

the globe to what they need – as a trusted

partner helping them thrive in the digital

world.

Households rely on us to stay

connectedwith loved ones. Businesses

andgovernments partner with us to

deliverfortheir stakeholders.

As technology keeps evolving, we

wanttokeep doing more to prove

ourdependability and build our

customers’trust.

Helping guide us

Personal, simple, brilliant

Our values guide us to fulfil our purpose

and achieve our ambition. They inform our

culture – the collective spirit we all tune

into. They’re more than just what we do.

They reflect both who we are and who we

aspire to be. They help us be a positive

influence, win stakeholders’ trust and keep

us accountable to society by setting high

standards for our business.

Our values guide all our decisions, at every

level. They define how we work every day.

They show us the right thing to do.

BT Group plc Annual Report 2024

18 Strategic report

Our strategic framework explains our ambitions

andhowwe aim to create value for our stakeholders.

Ourambitions are bold and stretching. This year

wemade excellent progress against the three

strategicpillars that support them.

Pillar 1: Build the

strongest foundations

We’re investing in the best converged

network. For us that means making sure

our full fibre and 5G networks aren’t just

the broadest, but can also deliver

converged capabilities. This combination

of convergence, brilliant experience and

faster, more reliable connectivity lets our

customers do more.

We’re becoming a simpler, more efficient

and dynamic company – easier to work

forand with, and more responsive to

customers’ needs. We are simplifying our

product portfolio, transforming customer

journeys and modernising our digital and

network technology with AI as a

fundamental component.

And we’re building a culture where people

can be their best. That means creating a

diverse, inclusive and forward-thinking

workforce that has the skills we’ll need

inthe future.

Pillar 2: Create

standout customer

experiences

We’re focused on delivering outstanding

service and experience to our customers.

That means creating market-leading

service, brilliant digital touchpoints and

trustworthy, secure and tailored

experiences.

Customers don’t buy products; they buy

answers to problems. So, we’re creating

smarter solutions based on the latest

converged, intelligent connectivity

services. We want our solutions to create

value for our home and business customers

and give them the outcomes they need.

We’re building value through commercial

excellence – with superior sales

effectiveness and better marketing

andpricing capabilities.

Pillar 3: Lead the

wayto a bright

sustainable future

We’re setting up our corporate portfolio

for growth. That means optimising our

assets, investments and picking our

partners carefully.

The best new technologies will help us to

grow sustainably. Our assets, capabilities

and expertise should drive profitable

growth and create brilliant outcomes

forour customers and country.

We’re creating a more responsible,

inclusive and sustainable business.

Thatmeans investing in digital skills,

championing responsible technology and

tackling climate challenges and inequality.

We’re building trusted relationships with

our stakeholders. Our diverse business can

only succeed through our partnerships

with customers, colleagues, governments,

regulators, suppliers and communities.

They are all critical to our success and

wetake them seriously.

BT Group plc Annual Report 2024

19 Strategic report

Pillar 1: Build the

strongest foundations

The best

converged

network

Building the strongest foundations starts

with the network. As the number of

connected devices keeps growing, our

customers expect the most reliable,

secureand resilient connectivity.

To meet their needs, we’re building the

UK’s digital infrastructure at pace –

through our new 5G network and

c.£15bnfull fibre investment.

Market leader in full fibre:

– Our full fibre network now passes more

than 13.8m homes and businesses

including 3.9m rural premises

. This

yearwe passed an average of 68,000

premises per week, 15% more than

lastyear.

– We’ve achieved FTTP build costs per

home at the lower end of the £250 –

£350 range.

– We’re connecting around 42,000

customers a week. We now serve 4.7m

full fibre customers – a 34% take-up

ratecompared to 30% last year.

– To meet demand from end customers,

over 90% of Openreach’s new orders

from CPs are for FTTP.

– Through our co-provisioning

partnership – where Openreach

helpsCPs to develop an ‘own brand’

experience for their customers, enabling

them to connect around 3,000 of their

own FTTP customers per week.

Market leader in mobile and 5G:

– At the end of FY24, our 5G network

covered more than 75% of the UK

population.

– We now expect to cover 90% by 2027,

ayear ahead of previous projections.

– We connected more customers to our

5G network. There were a total of 11.7m

5G devices on the EE network at the end

of the year – up from 8.6m last year.

– Our mobile network now has over 88%

UK geographic coverage and reaches

more than 99% of the population. We

added 2,920sq. km this year.

– As we continue expanding coverage,

33London Underground stations now

have mobile connectivity.

– We’re still the UK’s #1 network

according to independent surveys

fromRootMetrics and Umlaut.

– In the 2023 Connected Nations report,

Ofcom noted that our 5G network has

the most coverage at their Very High

Confidence rating.

13.8m

Our full fibre network now passes a total

of13.8m homes and businesses including

3.9m rural premises.

42,000

We’re also connecting around

42,000customers every week.

75%

Our 5G network covered more

than75%of the UK population.

BT Group plc Annual Report 2024

20 Strategic report

Progress against our strategic framework

We continued to build the

UK’s digital infrastructure

at pace through our new 5G

network and our c. £15bn

investment in full fibre.

a Rural premises are defined according to Ofcom’s Area3classification.

How we

connect you

on the move

Our 5G network now covers more major road and

rail routes than ever before, including around

the UK’s busiest and largest train stations.

InLondon, upgrades throughout TfL’s

underground network have helped enhance

therail experience as 33 London Underground

stations have mobile connectivity. This year

saw high-speed coverage go live at the first

West End stations, recently followed by the

first four Elizabeth line stations.

We’re continuing to extend mobile

coverage on platforms, escalators,

in ticket halls and tunnels so you

can continue to stream, call and

text as you travel on the

London Underground.

424tb of data on Central and Northern lines

inthe12months since the first stations went live.

424tb

This equates to spending over 72,000 hours streaming

4Kvideo, 106m hours of music streaming, or 28m hours

browsing the internet.

72,000hrs

We’re delighted to bring the UK’s best

network to the first Elizabeth line

stations, marking another significant

milestone in the rollout of 4G and 5G

across the London Underground.

Greg McCall

Chief Networks Officer, BT Group

BT Group plc Annual Report 2024

21 Strategic report

We merged our old Enterprise and Global

CFUs to create the new ‘Business’ CFU.

This cut duplication and contributed

to £142m ofsavings in FY24.

A simpler, more

efficient and

dynamic BT Group

We’re making great progress against our

transformation ambitions – delivering

£842m of cost savings in FY24. We’ve now

realised our gross annualised cost savings

commitment of £3bn against our May

2020 guidance. That puts us 12 months

ahead of schedule.

We’ve simplified our product portfolio

andtransformed customer journeys

andprocesses:

– We merged our old Enterprise and

Global CFUs to create the new Business

CFU to better connect with customers

and deliver brilliant, converged

experiences. This has also cut

duplication and supported £142m

ofsavings we’ve realised in FY24.

– But we haven’t stopped there. We’re

continuing to make BT Group simpler

and more efficient:

– Our SAP system replaced 17 legacy

finance systems, cutting licence and

operating costs by £71m a year and

improving group-wide access to

financial data.

– We’re improving our ability to serve

customers across different channels:

– By streamlining our customer

ordering systems, we’ve given our

teams the information they need

todeliver excellent service.

– We’re moving to more modern, modular

IT architecture and migrating our

customers to strategic networks:

– We partnered with Tata Consultancy

Services (TCS) to simplify our legacy

estate by migrating over 500 legacy

applications this year.

– We’ve closed our 3G network –

thesecond old network we’ve

switched off since the start of our

transformation.

– 91% of our critical data is on the

Google Cloud Platform, giving us a

strong foundation to embrace the

power of AI to create value from our

data assets, delivering £125m of value

to date and a further £76m confirmed

into the future through efficiencies

and new revenue against our £524m

target.

– Our rollout of AI Ops, which enables

‘self-healing’ of technology when

issues emerge, reached 23% across

our estate, reducing human effort

tofix outages and cutting downtime

for customers.

– We’ve deployed ‘Service Now’ – a

cloud-based workflow automation

platform. It’s been adopted by more

than 7,900 Business customers,

improving their experience through

automated processes.

£3bn

We’ve realised our gross annualised cost

saving commitment of £3bn against our

May 2020 guidance.

27%

We’ve simplified our Business product

portfolio by 27%.

13%

In FY24, our decommissioning programme

reduced our IT technology estate by

approximately 13% versus last year.

BT Group plc Annual Report 2024

22 Strategic report

Progress against our strategic framework

Pillar 1: Build the strongest foundations continued

Turned off,

switched on

Retiring legacy networks and embracing

moderninfrastructure unlocks possibilities,

enhances customer experiences, and fuels

innovation. As we continue our work to upgrade

the UK’s connectivity infrastructure, our efforts

help drive economic competitiveness through

seamless connectivity and emerging

technologies. Additionally, it reduces our

carbonfootprint, contributing to a bright

sustainablefuture.

Since announcing our transformation in FY20, we have

reduced the number of legacy connections by nearly

60% (see page 49).

We closed our 3G network, resulting

inestimatedannualised cost saving

intheregionof£24mat the end state.

£24m

60%

We switched off 15,613 fixed

legacy network elements.

Reducing emissions by 56,162 tonnes

ofCO

eattheendstate.

56,162tCO

15,613

Saving roughly 27 GWh of power consumption.

Enoughtoboil your 1.7 litre kettle more than

140m times.

27GWh

140+ million

BT Group plc Annual Report 2024

23 Strategic report

We can’t deliver our ambitions without

dedicated colleagues. So, our people

strategy aims to make BT Group a brilliant

place to work. We’ve made progress and

achieved a lot, but there is more to do.

A culture where

people can be

their best

Skills and organisational

development

– Today’s work landscape is always

changing. Giving colleagues new skills

doesn’t only benefit them, it’s essential

for our success:

– We’ve introduced My Campus – a

newAI-driven learning platform for

personalised learning experiences.

This year, we achieved a very promising

early adoption rate of 42%among

colleagues that have participated in

learning via the platform.

– We’re also empowering our software

engineers through new technologies

like Amazon Q Developer, a generative

AI-powered coding assistant.

Inclusion, equity and diversity:

– A workforce as diverse as our customer

base, and inclusion by design are critical

to our strategy and will help us drive

productivity, innovation and growth

forthe UK and beyond.

– We’ve made progress against our

diversity goals but it’s not yet enough;

we are committed to improvement

because we know inclusion and

diversity enable company

performance (see page 31).

– Important foundations are in place; we

have a strong community of People

Networks and partners like 10,000

Black Interns and CyberFirst.

– And our hard work didn’t go

unnoticedas the BT Group Ethnic

Diversity Network was awarded

“BestNetwork Group” at the

EthnicityAwards.

– Our data and surveys tell us that

colleagues from under-represented

groups are experiencing barriers

andnon-inclusive behaviours.

– Our Inclusion Plan aims to remove the

barriers and improve the capability

ofour people managers to lead their

teams inclusively (see page 31).

Occupational health and wellbeing

– Colleague engagement is still higher

than external UK benchmarks. Following

our March 2024 Your Say colleague

engagement survey, it improved by

2points to 75% compared to last year.

This has been driven mainly by Openreach.

– All UK colleagues had a minimum of

a5.5% pay rise. Our junior frontline

colleagues got bigger pay rises of

upto10%.

– Our Better Workplace programme is

transforming BT Group workspaces.

Since the programme started, we’ve

closed 746 older buildings and moved

over 22,000 colleagues to new facilities.

42%

This year, we achieved a very promising

early adoption rate of 42% among

colleagues that have participated in

learning via the My Campus platform.

7,196

Engineers trained this year

innewfibreskills.

BT Group plc Annual Report 2024

24 Strategic report

Progress against our strategic framework:

Pillar 1: Build the strongest foundations continued

AI learning

with the

personal

touch

We’re passionate about learning at BT Group, and we

want to create a space where our colleagues can

develop their tech skills and learn new ones too.

That’s why we’ve launched My Campus, a new learning

platform powered by AI, integrating content from

Pluralsight, LinkedIn Learning, and BT resources.

Tailored to each colleague’s role and interests, the

platform provides easy access to videos, courses,

articles, and podcasts for skill improvement. It also

monitors mandatory training, development plans,

and skills to enhance talent management.

37,335 different resources

available to colleagues.

37,335

20,430 facilitated courses

delivered to colleagues.

20,430

993 BT Group plans and pathways created

to curate content for colleagues

on relevant skills and topics.

993

Using this new knowledge helps prompt

interesting discussions, the courses

I’ve completed have encouraged open

discussions with my team.

Simon Yu

Senior Digital Governance

Manager for Digital at BT Group

BT Group plc Annual Report 2024

25 Strategic report

Pillar 2: Create standout

customer experiences

To go beyond our customers’

expectations, we deliver

outstanding service and

experiences – while giving

them smarter solutions and

keeping themsecure.

Outstanding

service and

experience

– By focusing on improving our customers’

experience, we’ve made good progress

on all of our customer satisfaction metrics:

– BT Group NPS of 24.0, up one point

year-on-year, further improving

customer experience (see page 49).

– Openreach has a 4.6 ‘Excellent’

Trustpilot score, based on reviews

from UK end customers.

– EE maintained the second lowest

number of Ofcom complaints per

100,000 customers for mobile 2

andbroadband 9.

– BT broadband had 11 Ofcom

complaints per 100,000

customers–continuing to beat

theindustry average.

– We aim to keep our customers safe

through strong security measures

thatinstil trust in our services:

– Every month, we spot over 2bn

malicious network events, which we

use to protect our infrastructure

andcustomers.

– BT Group was awarded the

prestigious Prime Minister’s Award

forCyber – for helping customers

avoid text message scams.

Smarter,

differentiated

solutions and

outcomes

We keep on improving our portfolio to offer

customers more flexibility. These evolutions

also give them the latest converged,

intelligent connectivity solutions to get more

from their digital lives.

– Many customers are hanging onto their

phones for longer. So we introduced

‘Flex plans’. The new service separates

handsets and connection payments so

customers can choose to pay off their

phones over longer periods.

– We launched ‘New EE’ – a modern

digital platform giving customers a

broader range of products and more

options on payments, technology and

subscription management.

– ‘New EE’ is powered by an EE ID identity

management system. Anyone in the UK

can create an EE ID and buy products

and services without having to be an EE

customer. The EE ID user base exceeds

9.5m customers.

– We’ve introduced EE TV – a complete

service of flexible premium content. This

UK first features an Apple TV 4K app

and a free multi-room option.

– Our new Smart Hub gives full fibre speed

of 1.6Gbps and includes mobile back-up

and next-generation wi-fi controls to

make sure they’re always connected.

– For business customers, we announced

Global Fabric. This brand-new cloud-

ready global network is flexible,

scalableand offers pay-as-you-use

connectivity – to help them get the

bestfrom a multi-cloud environment.

– With cyber security company Fortinet

we’re providing a new networking and

security service to help businesses manage

multi-site connections. Fully managed by

our experts, it minimises cyber risks and

supports cloud migration.

– In collaboration with Johnson Controls,

we’re providing smart building

technology to optimise energy usage

inworkplaces, cut cost and accelerate

the path to net zero emissions.

– Over EE’s network, we’re offering the

UK’s first Drone SIM. It comes with

unlimited data and connectivity in the

sky – enabling safer drone flights, better

control and live HD video streaming.

BT Group plc Annual Report 2024

26 Strategic report

Progress against our strategic framework continued

BT Group handles 999 calls in the

UK, providing support to the

emergency services round the

clock, every day of the year.

In June 2023, for only the second

instance in history the teams handled

over 1 million calls in a week.

Read more at bt.com/

annualreview.

Our 999 call centres managed the

highest annual call volumes ever

recorded, totalling 41 million calls.

41m

Bigging

up our

network

We’re dealing with more data, faster than ever

before, as an increasing number of devices and

machines are connected. Both individuals and

businesses rely on this connectivity to be

reliable, secure, and resilient and our fixed

network enables this.

Online gaming is still having a big impact. For

example, the release of Call of Duty: Modern

Warfare 3 in November 2023 saw an 89.9% surge

ingaming traffic compared to Call of Duty

Modern Warfare 2’s release.

Broadband traffic on Openreach’s network throughout

theUK increased by around 9% in 2023.

The busiest day of 2023 for the BT/EE network was Tuesday

26 December (Boxing Day), when traffic peaked at ~25TBps

and more than 147Pb of data was consumed.

147Pb

More than 55,000 international roamers used

morethan3Tbof data during Eurovision week, the

equivalent of 750,000 hours of music streaming.

The release of Call of Duty: Modern Warfare 3

in November 2023 saw an 89.9% surge in gaming traffic

compared to Call of Duty Modern Warfare 2’s release.

3Tb 89.9%

750,000 hours

BT Group plc Annual Report 2024

27 Strategic report

Pillar 3: Lead the

waytoa bright,

sustainablefuture

A portfolio

positioned for

growth

This year we continued simplifying our

portfolio and removing non-core assets

tostreamline the group and position us

forgrowth:

– For example, we divested Pelipod – a

secure collection point service for UK

field service engineers.

– Continuing our asset-light

strategyoutside of the UK, we

soldBTEnia, aregional Italian

telecommunications business.

Incubating new tech-driven

growth engines

We’re investing in the future by focusing

innovation efforts on tech-driven growth

areas that match our strengths. This

willdeliver better, smarter outcomes

forcustomers.

– Our Adastral Park R&D centre continues

innovating around network technology.

Our experts are pioneering the next

generation of communications

capabilities to help transform how

people live and work.

– The Adastral Park team also developed

Multicast Assisted Unicast Delivery. It

delivers more reliable, better-quality

online video streaming – while cutting

energy and bandwidth use during peak

events by over 50%.

– In East Lothian we’re piloting the UK’s

first Electric Vehicle (EV) chargers

could revolutionise EV charging across

the country.

– Our remote healthcare solution uses a

patient app to give them early access to

health monitoring, resources to manage

their conditions and instant remote

access to clinicians. We’re currently

piloting it in 26 GP practices.

A responsible, inclusive,

sustainable business

Our Manifesto describes our long-term

commitments to contributing positively

tocountry and community.

– We’re creating a more inclusive society

to help drive UK productivity, innovation

and growth:

– This year we helped 3.7m people and

more than 200,000 business owners

and employees, improve their digital

skills – a total of 23m people helped

since FY15 (see page 35).

– We partnered with AbilityNet to

helparound 3,000 digitally excluded

over-65s build confidence and

skillsthrough various campaigns –

including a series of free ‘BTea Room’

digital workshops.

– To support small business customers

we organised 120 Netwalks. This

initiative provides self-care, mental

health support, early intervention

andnetworking opportunities to

smallbusinesses.

– Over 80% of UK children play games

online at least a few times a week. So

welaunched an online resource called

‘GameSmart’ to give parents safety

tipsfor managing children’s gaming -

without being overly restrictive.

– We created EE Hope United to combat

online hate. This year we lobbied the

House of Lords to amend the Online

Safety Bill to better protect women

andgirls.

– We’re pushing further to become a

netzero carbon emissions business

byMarch 2031:

– We’ve cut our carbon emissions

intensity by 61% since FY17. And our

transition from copper to full fibre

networks will speed up our carbon

emissions cuts – as fibre is 80% more

energy efficient than copper.

– We’re also switching our commercial

fleet to EVs. We added more than

1,700 EVs to the fleet this year,

bringing the total to over 4,100.

– This year we cut our global energy

consumption by 140GWh – a 4% drop.

– Our customers avoided more than

1.5m tonnes of carbon emissions this

year through our products and

services, including full fibre broadband.

– Openreach brought full fibre broadband

to Fair Isle, one of the UK’s most

geographically remote islands. To avoid

protected landscapes and bird nesting

season, they had to reroute the build by

100km. That’s the longest continuous

fibre transmission distance ever

deployed in the UK.

BT Group plc Annual Report 2024

28 Strategic report

Progress against our strategic framework continued

3.7m

This year we helped 3.7m people and over

200,000 small business owners and their

employees improve their digital skills.

Your future

in the tech

industry

We worked with local science, technology,

engineering, and mathematics (STEM) enrichment

experts Graphic Science for our National Careers

Week 2024. We hosted a diverse group of secondary

school students to help them think about what

their future could look like in digital, data,

innovation, and technology. Through interactive

workplace activities and mentoring from

colleagues, pupils gained hands-on experience

with problem-solving challenges balancing

people, planet and profit, developing inclusive

technology solutions for mental wellbeing,

interactive demos on fibre splicing, cyber security,

data monitoring and VR simulations.

We hosted a diverse group of over

190 secondary school students at

our National Careers Week 2024.

96% of pupils said that the day had helped

them discover more about the tech industry

and the role that they could play.

190+ 96%

94% of pupils said that the day had helped

them understand the links between their

studies and the skills employers look for.

The day aimed to inspire students

about future careers in digital, data,

innovation, and technology fields while

helping them identify transferable skills

using our Get Work Ready toolkit.

94%

BT Group plc Annual Report 2024

29 Strategic report

We’re creating a culture where everyone sees the value

ofcuriosityandlifelong learning – and has the skills

andcapabilitiestheyneed to evolve with our business.

This year we hired around 12,000 people.

Roughly 8,000 were in the UK, including

around 1,000 apprentices and 200 graduates.

Roughly 17,000 colleagues left the business –

around 14,000 through natural attrition

and 2,000 through paid leaver programmes.

Building tomorrow’s skills

andcapabilities

As our business evolves, so too will the

skills and capabilities we need – resulting in

a smaller, but more skilled, diverse and

tech-savvy future team.

We’re now clear on what’s needed to

deliver on the workforce reduction targets

we announced in May 2023, and to make

the right changes to our mix of skills.

Safer and more

inclusiveleadership

Building an inclusive environment starts with

our leaders. This year we launched a 10-

month learning programme for our senior

leaders to build more inclusive leadership

practices, with 87% enrolled so far.

The programme focuses on creating an

inclusive climate, building psychological

safety, developing a sense of belonging

and learning how to have conversations

about inclusion. The training is also

helpingbuild the right habits and better

accountability – with tools for leaders to apply

what they’ve learned with their teams.

BT Business school

We created and ran a CEO-sponsored

mini-MBA style programme for senior

leaders in our Business unit. It helped our

senior management team build a stronger

community, fill in skills and knowledge

gaps around effective commercial

leadership and address cultural challenges.

Talent attraction, inclusion,

equityand diversity

We partnered with Women Returners on

the ‘Restart’ project to attract and retain

career returners. The widespread social

media campaign generated significant

interest and resulted in over 300

applications for 18 places.

Launched in September 2023, our

‘Business as Unusual’ campaign aimed to

disrupt the market around hiring talent. It

generated significant social media interest

which helped us find 202 talented people,

identify 24 exceptionally talented people

for future hire, and hire eight.

During the campaign we also got an overall

increase in job applications. September

2023 saw the year’s highest number of

applicants (a 26% uplift vs August). We

had more external applications from

women, and overall women external hires

in the UK also rose to 45% in September

and October last year.

EE’s attraction programme kicked off in

2023. Aiming to reach a more diverse

audience, it included a new EE brand

campaign, industry partnerships and

newcandidate profiles.

We’re already seeing a positive impact in

terms of colleague retention. We also

hiredmore apprentices than last year with

recent cohorts 8% more likely to stay at

least three months compared to our

normal hiring process.

My Campus – a personal learning

platform

Upskilling and reskilling colleagues across

the group will boost our performance and

help transformation happen. Making

learning easier and more habitual gives us

the best chance of giving our colleagues

the right skills for the future.

BT Group plc Annual Report 2024

30 Strategic report

Our people

We never stop

investingin our people

Ethnic diversity is based on voluntary

disclosure. In 2023, 77% of our UK

colleagues disclosed their ethnicity.

77%

Inclusion, equity and diversity

We’re encouraging more inclusive thinking

through understanding barriers to inclusion

and taking action to make sure all our people

can be their best at work. Our Manifesto has

bold targets for diversity. While we’re making

progress in ethnic minority representation,

there’s much more to do in other areas.

Our UK declaration rates are now 81%.

More colleagues are feeling comfortable

to declare their personal information,

giving us better demographic data to help

us focus on areas of concern.

Our 2025 Manifesto targets for gender,

ethnic minority and disability at various levels

of the organisation are listed in the table

opposite against the progress made in FY24.

Whilst we have made progress towards some

of our goals, we have work to do to make

BTGroup a more inclusive workplace for

everyone as we strive to achieve our

inclusion, equity and diversity ambitions. We

are focused on improving inclusion in the way

our jobs are designed and how our workplaces

operate, underpinned by an unwavering

focus on inclusive leadership capability – all of

which are required for BT Group to have a

workforce that reflects our customers and

the communities we operate in.

We collect diversity data for protected

characteristics (as per UK employment

law) and special category data (as per

GDPR, or local laws in other geographies).

This is done voluntarily, directly into our

HR system (SAP SuccessFactors).

We store, use and report on data in line

with local laws and our advertised

employee privacy notices. Due to local

restrictions on capture and reporting of

ethnicity and disability, the information

opposite only relates to the UK.

More diversity in digital skills will drive

productivity, innovation and growth in our

business and for the whole of the UK (see

our Manifesto on pages 34 to 39).

Our focus on targeting under-represented

ethnic minority communities in the UK

meant that in FY24 29% of new UK-based

roles in Digital were filled by people from

ethnic minority backgrounds.

We have a broad ecosystem of partners

(including Career Returners, Code First Girls

and 10,000 Black Interns) to help us reach

into the community, create awareness, and

invest in, develop and open up opportunities

for future digital talent.

We have engaged with colleagues through

the Colleague Board (see the Corporate

governance report on pages 90 to 91) and we

have worked with our highly active and award-

winning People Networks. These colleague-

led groups raise awareness and advocate for

change inside and outside BT Group.

31 March 2024 31 March 2023 2025 Targets

BT Group (excludingOpenreach)

Men

65% 65%

Women

35% 35% 46%

Ethnic minority

16% 13% 16%

Disabled

9% 8% 14%

Openreach

Men

90% 90%

Women

10% 10% 12%

Ethnic minority

9% 9% 10%

Disabled

6% 6% 6%

BT Group

Men

74% 74%

Women

26% 26% 32%

Ethnic minority

13% 12% 13%

Disabled

8% 7% 10%

Board

Men

50% 67%

Women

50% 33% 33%

Ethnic minority

2 members 2 members 2 members

Disabled

1 member 1 member

Executive Committee

Men

60% 70%

Women

40% 30% 33%

Ethnic minority

2 members 2 members 2 members

Disabled

1 member 0 members

Senior leadership team

b & c

Men

74% 78%

Women

26% 23% 41%

Ethnic minority

11% 14% 15%

Black/black heritage

—% 1% 5%

Disability

14% 8% 10%

Senior management team

Men

65% 65%

Women

35% 35% 41%

Ethnic minority

9% 9% 15%

Black/black heritage

3% 2% 5%

Disability

14% 9% 10%

a UK population only.

b For the purpose of the UK Corporate Governance Code 2018, our leadership comprises the Executive

Committee (excluding Executive Directors on the Board but including the CEO, Openreach) and all Executive

Committee direct reports (excluding admin roles). This totals 28 women (33%) and 56 men (67%).

c For the purposes of the Companies Act 2006, our senior management comprises those employees responsible

for planning, directing and controlling the activities of the group, or a strategically important part of it

(members of our senior leadership and senior management teams, and directors of the group’s subsidiaries

but excluding directors on the Board). This totals 196 women (35%) and 355 men (65%). Numbers presented

include 70 subsidiary directors (50 men and 20 women) who are not otherwise members of our leadership or

senior management teams.

BT Group plc Annual Report 2024

31 Strategic report

Pay gap reporting

Gender

This is the seventh year we’ve reported our

gender pay gap. Our UK gender pay gap is

broadly the same as last year – we continue

to track lower than the national average

gender pay gaps:

– Our median gender pay gap narrowed

slightly to 5.6% (-0.5%).

– Our mean gender pay gap widened

slightly to 4.0% (+0.3%).

Median pay gap %

17.8

17.4

14.9

15.1

14.9

14.3

5.0

4.8

5.0

6.7

6.1

5.6

Office for National Statistics (ONS) median

BT Group median

2018

2019 2020 2021

2022 2023

– Our gender gap is still lower than the UK

average of 14.3% (median) and 13.2%

(mean) and our female representation in

the upper pay quarter has improved.

– Despite an increase in female hires

between 2022 and 2023, female

representation remains unbalanced at

23%, with a higher attrition rate among

women. This is reflected in the pay

quartile distribution, with a higher

proportion of women in lower pay

quartiles and little improvement in

theupper pay quartiles.

You can read our full statement –

including all the entities in scope at

bt.com/genderpaygap

Ethnicity

This is the fourth year we’ve voluntarily

reported our ethnicity pay gap (which is

not a legal requirement).

Ethnicity pay gap %

2023 2022

Mean Median Mean Median

Ethnic

minority

(0.8)% (1.8)% (0.3)% (1.2)%

Asian

(3.4)% (2.9)% (3.6)% (2.4)%

Black

5.1% (0.9)% 6.6% (0.3)%

Multi-

ethnic

0.1% 4.0% 3.3% 5.2%

Other

ethnic

(3.7)% (8.7)% (6.2)% (9.3)%

Ethnicity bonus gap %

2023 2022

Mean Median Mean Median

Ethnic

minority

7.4% 4.2% 8.4% 14.2%

Asian

4.2% 2.5% (2.1)% 1.3%

Black

41.4% 11.9% 37.7% 53.9%

Multi-

ethnic

(27.7)% 2.3% 0.7% (14.9)%

Other

ethnic

(6.0)% (3.5)% (1.5)% 40.1%

Ethnic diversity is based on voluntary

disclosure. In 2023, 77% of UK

colleagues disclosed their ethnicity.

Aggregated ethnicity pay gap analyses

canoften mask wider issues that people

ofdifferent ethnicities face at work and

insociety. So each year we look at our

datavery carefully to get a more

nuancedpicture.

In 2023 ethnicity pay gaps stayed low and

favourable – with an overall median pay

gap of -1.8% and a mean of -0.8%. But

they do vary by different ethnic group.

The figures above detail the movement in

pay and bonus gaps to the majority by

ethnic group from FY23 to FY24.

– The Black/African/Caribbean/Black

British mean pay gap is still largest of all

the ethnic groups – although it did

narrow slightly this year and the Asian

pay gap is the narrowest. This is

reflected in the fact there are more

Asian colleagues in higher-paid roles like

management, and more Black colleagues

in frontline roles like engineering.

Disability

This is the first year we’ve voluntarily

reported our disability pay gap (which

isnot a legal requirement). It reflects

ourdrive for equal opportunity across

allcharacteristics.

Disability is based on voluntary disclosure.

At the time of the snapshot date in April

2023, 68% of UK colleagues disclosed their

disability status. Improving this rate is the

biggest lever to help us understand and

improve our disability pay gap.

2023

Mean Median

Pay 0.7% 0.0%

Bonus (6.5)% (0.2)%

– At group level, mean and median pay

gaps are low – with a small mean gap

of0.7% and a zero median gap.

– The overall bonus gap is negative. This

shows our disabled employees getting

slightly higher bonuses – influenced by

the higher declaration rate in our senior

leader population.

You can find more examples of BT

Group’s initiatives to improve

representation (as well as pay quartile

analysis, bonus information and entity

breakdowns) in our ESG Addendum at

bt.com/esgaddendum

Inclusive health

We know how inclusive health affects

ourworkforce and colleagues – so we

listento our People Networks closely.

Wepartnered with our:

– Ethnic Diversity Network around mental

health care disparities and to enhance

our mental health services.

– Able2 Network on matters like

occupational health, BT passports, living

with disabilities and mental health.

– Jewish and Muslim Networks on coping

with the impact of the situation in Israel

and Gaza.

– Gender Equality, Carers, Pride, Peer

toPeer Support and Armed Forces

Networks on topics like cancer and

suicide prevention.

– Carers Network to apply for Carer

Confident Level 3 – Ambassador

Status(The Employers for Carers

Benchmarking Scheme).

Adjustments for everyone who

needs them

We’re committed to making sure any

colleague who needs a workplace

adjustment gets one. These are positive

adaptations which help colleagues with a

disability, health condition or change in

personal circumstances that might stop

them working at their full potential.

BT Group plc Annual Report 2024

32 Strategic report

Our people continued

This year we initiated 1,146 referral cases,

the most common being adjustments for

back or neck issues (338 cases).

Where specialist advice is needed, a

workplace adjustments referral service is

provided by our third party team, Health

Management Limited. Using empowER

toraise cases for each referral provides

Managers with a guided journey to follow

andeach case is supported by HR Services.

Occupational health and wellbeing

Absences across BT Group from sickness fell

to an average of 3.67% calendar days lost per

colleague (down from 3.87% last year).

And when our colleagues need extra help

getting back to work, our fully funded

rehabilitation programme for

musculoskeletal and mental health

services returns 97% of them to full duties.

Better mental and physical health

Today’s world is psychologically challenging.

In a Volatile Uncertain Complex Ambiguous

world we continue to be at the forefront of

innovative approaches to improve the

wellbeing of our colleagues and help them

maintain optimum mental health. We

continue to promote our Employee

Assistance Programme and CBT Mental

Health Service as well as online guided self

help modules.

In FY24 we started the process of getting BSI

ISO 45003 certification for psychological

health and safety in the workplace. We

achieved the stage 1 audit objectives and

theBSI auditor has recommended we

nowmove to stage 2 audits.

As well as strengthening our fitness for work

medicals for our most critical roles, we

continue to do statutory health surveillance

for all our poling and civil engineers.

Putting musculoskeletal health

and safety first

We’ve been getting more sophisticated

insights from our health and safety data.

We have moved from reactive use of data

to earlier and more active intervention.

The insights are helping us understand

where to best focus our attention to make

sure everyone at BT Group can work safely,

and return home safe at the end of the day.

Earlier intervention helps people stay in

(orreturn to) work after injury or illness –

helping work become more of a part of

therehabilitation process.

In response to rising musculoskeletal

related absences in our Openreach field

engineering colleagues, using a data led,

evidence-based approach we launched

two new clinical intervention pilots this

year to optimise colleagues’ health – the

Musculoskeletal Specialist Assessment

and Medical Assistance Programme.

They include structured pathways to clinical

support services, earlier categorisation based

on the risk of long term sickness absence, and

help for people to return to contractual work.

In FY24 we reduced musculoskeletal-

related absences by around 24,000 days

equating to £500,000 in savings.

BT Group plc Annual Report 2024

33 Strategic report

£139,000

Introduction of My Discounts – new discount

scheme for colleagues. Almost £139,000 worth of

savingsfor colleagues in the first four months.

Taking care of ourteam

Running the 999 emergency service

We are the first, calming voice heard every time someone

in the UK calls the 999 emergency services. In FY24 we

took 41 million calls – answering on average in less

thanasecond.

In 2023, we reviewed our attendance rules for the

999service. Our aim was to make shift patterns fairer

and more consistent. The changes we’re making include

‘bunched’ days off and a guaranteed weekend off every

month. These will make our colleagues’ shift schedules

more predictable and structured, while allowing more

flexibility and making it easier for them to plan around

their working weeks.

1,000+

To help out teams across the whole group, this year we

launched My EV – our electric vehicle salary sacrifice

scheme, which generated more than 1,000 applications

inthe first week.

Launched in 2021, BT Group’s Manifesto is our plan to accelerate

growththrough responsible, inclusive and sustainable technology.

OurManifesto is rooted in our purpose, to connect for good. And it will

help us achieve our ambition – of becoming the world’s most trusted

connector of people, devices and machines. It combines a clear

commercial agenda with measurable promises to make a bigger

positiveimpact on people and planet.

Responsible

New tech must earn people’s trust

and transform lives for the better.

So we’ll:

– invest in new growth tech to help us live

and work better

– apply responsible tech principles across

our value chain

– partner to build a responsible tech

ecosystem that builds trust and drives

growth.

Inclusive

The future of tech must be diverse

and inclusive for everyone to

benefit.

So we’ll:

– build a diverse workforce through our

inclusion, equity and diversity targets

– pass 6.2m rural premises with full fibre

by the end of 2026 (as part of our 25m

build target)

– expand our 4G/5G mobile networks across

the UK, including in rural locations

– help 25m people with digital skills by

theend of March 2026.

Sustainable

Tech must accelerate our

journey to net zero emissions

and a circular economy.

So we’ll:

– be a net zero business by the end of

FY31, and net zero on all Scope 3

emissions by FY41

– help customers avoid 60m tonnes of

e by 2030

– build towards a circular BT Group by

2030, and a circular tech and telco

ecosystem by 2040, while protecting

nature and biodiversity.

We contribute to the UN

Sustainable Development Goals

BT Group plc Annual Report 2024

34 Strategic report

Our Manifesto

Responsible

New tech must earn people’s trust

and transform lives for the better.

We apply our responsible tech principles

across our value chain. They help us consider

how to minimise harm and benefit people

every time we develop, buy, use or sell tech.

They’re grounded in the UN Guiding Principles

on Business and Human Rights, and are part

of our risk management framework.

Our responsible tech principles are:

For Good: We design and deliver tech to

empower people and improve their lives.

Accountable: We’re accountable for our

actions and take care to avoid, and protect

against, tech misuse.

Fair: We work hard to ensure everyone is

treated fairly and with respect.

Open: We listen, collaborate and are

transparent about our actions.

Our Responsible Tech and Human

RightsSub-Committee oversees how

weimplement the principles. This year it

continued looking at emerging risks and

strategic growth areas. We used external

experts to help define our approach on

topics like high-risk markets, AI and new

products and innovation.

Developing new tech

We apply the principles right from the start

when we design and develop new tech.

This year we:

– completed a human rights impact

assessment of wi-fi controls to help us

identify, understand and assess the risks

of the product

– conducted user research to understand

how our responsible tech principles

could build trust and differentiate us

– published our approach to children’s

digital rights.

Buying tech

Our procurement company, BT Sourced,

has responsibility and sustainability criteria

set into its processes. They give our buyers

clarity on supplier risks and opportunities.

This year we:

– reviewed human rights risks in our

supply chain, to better understand

theserisks and identify any gaps in

ourpolicies and processes

– launched a ‘worker’s voice’ pilot in five

supplier factories, to understand the

experience of people working in our

supply chain

– carried on doing due diligence on our

direct tier 1 manufacturing supply chain

(visit bt.com/modernslavery for more).

Using tech

We want to make sure our products and

services are used for good. So we focus on

protecting privacy and free expression and

preventing online harms.

This year we published an AI standard

forcolleagues, to ensure our use,

development, purchase and sale of AI

isconsistent with the responsible tech

principles, thereby helping to reduce

riskatevery stage of the AI life cycle.

Selling tech

We sell to customers around the world.

This year we:

– enhanced sales due diligence in Business

by adding checks for negative media

coverage. This helps us assess any

potential human rights risks through

thelife of a customer’s contract

– conducted a human rights impact

assessment in a high-risk country,

whichwe’ll use to steer future

businessstrategy.

The 2023 Global Child Forum Benchmark

Report looked at companies’ policies,

approach and commitment to children’s

rights. It rated BT Group as one of Europe’s

top performing companies and as a global

leader in the telecoms sector.

Inclusive

The future of tech must be

diverse and inclusive for

everyone to benefit.

Embracing inclusion, equity and diversity

iscore to our people strategy and key to

our growth. We want to be champions for

digital inclusion too.

Many families and vulnerable groups have

been badly hit by the cost of living increases

of recent years. We want to support them.

We’re market leader in social tariffs,

currently helping around 1m low-income

and vulnerable customers through

affordable fibre broadband and calls.

Andwe’ve frozen these tariffs this year to

protect them from inflationary price rises.

Our Home Essentials social tariff gives

discounted broadband to customers on

Universal Credit. Our EE Basics tariff does

similar for eligible mobile customers. And

Openreach’s ‘Connect the Unconnected’

scheme waives connection fees for

vulnerable customers, via their CP.

Working with charity partner Home-Start

UK, we’re also supporting the most socially

excluded households through gift-in-kind

contributions, fundraising and donations,

which totalled more than £134,000 this

year. And our digital skills help is giving

more people the benefits of being online –

particularly vulnerable groups in society,

like children and over-65s.

We’re developing the right digital

infrastructure so no one gets left behind. Our

full fibre broadband already passes 13.8m

homes and businesses, including 3.9m in rural

areas. Our 4G mobile network reaches 99%

of the UK population, while our 5G network

now reaches 75%, as wecontinue the rollout

of 5G across thecountry.

You can read more on page 20.

Help with digital skills

This year we helped 3.7m more UK people

and businesses improve their digital skills.

Since FY15, the total is 23m people. And

we’re on track to hit our target of 25m

bythe end of FY26.

Tackling online hate

Hope United is part of EE’s ongoing

commitment to deliver positive

societalchange. It features a team of

eliteprofessional football players –

representing all four home nations –

coming together to tackle online hate.

So far, it’s helped educate 10.9m people

on being good digital citizens.

BT Group plc Annual Report 2024

35 Strategic report

EE GameSmart helps demystify the

world of gaming for parents, helping

you to create positive shared

experiences with your children.

With game trailers, information and

guides, parents feel ready to

embrace the world of gaming. We’ve

worked with Internet Matters

creating content to help parents

feel confident as their child enters

the gaming world.

Read more at

eegamesmart.co.uk

During the 2023 Women’s Football World

Cup, the ‘Play on’ campaign reached 3.5m

people, encouraging young people not to

drop out of sport due to hate. One of the

EE Hope United squad also visited 10

Downing Street to support amendments

tothe Online Safety Bill, helping to protect

women and girls.

Supporting small businesses

Our free digital skills programme helps

businesses unlock their potential. This year

we reached 200,000 more business owners

and employees. We gave them:

– help on everything from digital

marketing and social media to GenAI via

our LinkedIn Live webinar series with

partner Upskill

– practical tips and advice from successful

entrepreneurs through our ‘Let’s Talk

About’ video series

– access to live webinars, recordings and

in-person mentoring through our

partnership with the National Startup

and Great British Entrepreneur Awards

– a UK-wide tour, webinars and

mentoringsessions (working with

SmallBusiness Britain).

Employability and digital skills for

young people

We’re bridging the gap between education

and employment by making sure children

and young people are part of the UK’s

digital skills agenda.

Over 1,000 secondary school children from

disadvantaged backgrounds came to our

‘Get Work Ready’ days at our UK

workplaces. The days gave a window into

the types of STEM roles and skills needed

in modern business – linking what they

were learning at school to the skills

employers look for.

With the national STEM Learning Centre

andseven state schools in the Bristol

Education Partnership, we helped launch the

ENTHUSE programme. It supports teachers

with essential continuous professional

development and industry insights – and

withworkplace events to inspire students to

consider roles in data, digital, engineering,

innovation and technology.

We’re lead sponsor of the FastFutures

programme to promote and grow digital

talent in support of the Government’s skills

agenda. Partnering with Avado and other

businesses, we’re helping a diverse range of

18-24 year olds get into digital roles. So far,

we’ve helped over 7,400 young people

buildtheir networks, get experience and

accelerate their careers. We’re currently

funding two cohorts – a total of 500 learners –

on a Digital Analyst Boot Camp. Eighty-

seven BT Group colleagues were actively

involved in mentoring 138 learners this year.

We also support the National Cyber

Security Centre’s CyberFirst programme.

Aiming to encourage school pupils into

cyber and tech careers, the programme

hosted events for more than 2,000 pupils

last year.

And it’s our 24th year organising and

sponsoring the BT Young Scientist &

Technology Exhibition, which is now

oneofEurope’s leading science and

technology exhibitions, celebrating STEM

research and innovation. This year’s event

included 550 projects from more than

1,100 students from 219 schools

acrossIreland.

Child online safety

We’re helping to protect children online

through a number of initiatives. This

yearwe:

– relaunched PhoneSmart with better

newfunctionality to help minimise

onlineharm risks, as more and more

youngsters own mobile phones

– launched GameSmart – featuring online

safety information for parents on their

child’s use of games and gaming devices

– ran a campaign with Internet Matters for

parents of under-fives on healthy

technology use

– launched an online safety hub on

theInternet Matters website.

Senior skills

We have a long-standing history of helping

UK citizens learn new digital skills. But

today 7% of the population are still offline.

Older people are one of the key groups in

this population. They’re also more likely to

suffer from social isolation, worries around

living costs and losing their landline in the

Digital Voice switchover.

So far, in partnership with AbilityNet, we’ve

helped around 3,000 digitally excluded

over-65s build their confidence and

develop digital skills. Together, we ran

several ‘BTea Room’ sessions across the

UK this year. Hosted in cafes, these free

digital skills workshops covered a range of

skills – from getting started with devices, to

social media and staying safe online.

We teamed up with lexicographer Susie

Dent to create a Digital Dictionary. It

breaks down common digital terms that

younger people take for granted but that

are often confusing for older people.

And we’ve also been targeting the

networks of older and digitally excluded

people to encourage them to help get

their loved ones more online.

India skills partnership

Since 2019, BT India, with partner the

British Asian Trust, has helped around

1.1m young people with digital skills, STEM

career guidance and job opportunities.

This year they launched an Outdoor School

for Girls, which will provide digital, life,

sustainability and entrepreneurial skills to

180,000 girls over the next three years.

With our support, education company

Katha is working with the Municipal

Corporation of Delhi to teach more

than4,000 girls, through setting up

robotics labs, refurbishing IT labs and

training teachers.

BT Group plc Annual Report 2024

36 Strategic report

Our Manifesto continued

In today’s digital age, many

essential tasks require internet

access, yet 22% of seniors still do

not use the internet. To bridge this

gap, BT Group partnered with

AbilityNet to offer tailored digital

training for those aged 65 and

above, boosting their skills and

confidence online while promoting

safety awareness.

Read more at bt.com/seniorskills

We’ve helped 3,000 digitally

excluded over-65s build their

confidence and develop

digitalskills.

3,000

Sustainable

Tech must accelerate our

journey to net zero emissions

and a circular economy.

We’ve led on climate action for more than

30 years. We’ve been ‘A’ rated on climate

by CDP for the past eight years running.

But as the climate crisis worsens, we all

need to speed up the transition to a low

carbon economy.

This year we refreshed our Carbon

Reduction Plan. It provides stakeholders

with a clear view of the actions we’re taking

to shift BT Group and our value chain to a

net zero economy.

We’ll be net zero for our operations by the

end of March 2031 – and for our full value

chain by the end of March 2041. We also

aim to help customers avoid 60m tonnes of

e and build towards being a circular

business by the end of March 2030.

Reducing carbon emissions

inouroperations

We’ve cut our carbon emissions intensity

by 61%. This is against our science-based

target of an 87% cut by the end of March

2031 (compared to FY17 levels).

All of the electricity we purchase to power

our buildings estate, shops and networks

worldwide is certified as renewable

through our procurement of energy from

sources that include power purchase

agreements (PPAs) and green tariffs,

supported by renewable energy

certificates (RECs).

Long term renewable PPAs met 24%

ofour UK electricity demand this year,

supporting additional renewable electricity

infrastructure across the UK grid. Where

we don’t control the supply of electricity or

where we can’t guarantee the origin of the

electricity, we purchase additional RECs to

cover the proportion of our consumption

(for example, at landlord controlled sites).

We have more to do to get to net zero.

Butwe know how to get there – by

electrifying our vehicle fleet,

decarbonising our estate and building

more energy-efficient networks.

Switching our vehicle

fleettoelectric

Nearly 80% of our operational emissions

(Scopes 1 and 2) come from our

commercial fleet of over 33,000 vehicles.

We’re working hard and investing to

convert the majority of this fleet to electric

or zero emission vehicles by the end of

FY31. In total we have over 4,100 electric

vehicles (EVs) in our fleet, including more

than 1,700 that we added this year.

As a founding member of the UK Electric

Fleets Coalition, we’ll keep on pushing for

policy measures to drive a UK EV switch.

This year, the coalition published a new

document to encourage more policy

momentum on EVs.

Our start-up and digital incubation arm,

Etc., has developed an EV charging unit

built from a street cabinet (traditionally

used to store broadband and phone

cabling). We’re exploring the potential

toturn up to 60,000 cabinets into EV

charging points. This would increase the

availability of charging infrastructure on

the UK’s roads and support Government

sustainability targets and plans to

decarbonise the UK transport system.

This year, we introduced a salary-sacrifice

scheme for UK colleagues to buy EVs

through personal lease arrangements. And

for colleagues in India, we’re introducing

EVs as part of our transport and shuttle

passenger services. Today there are

94EVs in use and we’ll keep growing

thatnumber.

Decarbonising our buildings

We cut our global energy consumption

byaround 140GWh this year – a 4% drop

on FY23. This was mainly achieved

throughrationalising and upgrading our

buildings and networks, and reducing

ourfuel consumption as we continue

tomigrate our fleet to EVs.

Our Better Workplace Programme is

consolidating hundreds of BT Group

buildings to around 30. The new or

refurbished buildings have environmental

impact firmly in mind. New builds meet

theBREEAM

- Excellent standard.

A rated

A rated on climate by CDP.

4,100+

In total we have over 4,100 EVs in our fleet.

BT Group plc Annual Report 2024

37 Strategic report

a 99.9% of the global electricity that BT Group purchases is certified as renewable. The remaining 0.1% is where renewable electricity is not available for purchase in the market.

b Building Research Establishment’s Environmental Assessment Method, which is the world’s leading sustainability assessment for infrastructure.

Building energy-efficient networks

We’re building more energy-efficient fixed

and 4G/5G networks, while switching off

our old legacy ones. As well as saving

energy, full fibre networks are better at

handling the effects of physical risks like

flooding and higher temperatures. That

means fewer faults or engineering visits.

Cutting carbon emissions across

our value chain

Our Scope 3 carbon emissions account for

95% of our overall emissions. They come

mainly from purchased goods in our supply

chain and from customers using our

products and services.

Since FY17, we’ve cut our Scope 3 net

emissions by 26%, to 3,000,873 tonnes of

e this year. This is a decrease of around

4% on FY23.

Helping suppliers cut carbon

We’ll keep working with suppliers on

cutting carbon. We’ve cut supply chain

emissions by 25% since FY17. Our target

isa 42% reduction by the end of

March2031.

This year, we’ve refreshed our climate

change policy, which forms part of our

expectations and generic standards

applicable to suppliers working with us.

Itrequires them to conduct climate risk

assessments, set 1.5ºC aligned science-

based targets and to report on progress

annually. And we continue to engage with

key suppliers on carbon reduction through

contract clauses, for example, we’ve seen

savings from Circet that reduced over

100tCO

e in 2023 under its contract with

BTGroup and Openreach.

Also this year we:

– launched a campaign asking suppliers to

set 1.5°C aligned science-based targets,

make them public and report on

progress annually

– encouraged more key suppliers to report

to CDP to improve visibility and action

on emissions. Today, over 300 of them

are doing that

– continued working with the Exponential

Roadmap Initiative and 1.5°C Supply

Chain Leaders to drive climate action

across global supply chains – while

supporting small and medium-sized

enterprises through the SME Climate

Hub and UK Business Climate Hub

– joined the JAC (Joint Alliance for CSR)

Board of Directors. It’s an association of

27 communications providers working

together to sustainably transform supply

chains across the ICT sector.

Cutting our customers’ carbon

There’s huge potential to use our

networks, products and services to help

customers cut their emissions – for

example through decarbonising the

gridand improving our products’

energyefficiency.

We’ll help customers avoid 60m tonnes of

carbon by the end of March 2030 – which

they’ll do through technologies like full

fibre broadband, mobile solutions and

cloud computing. This year we:

– helped customers avoid more than 1.5m

tonnes of carbon (nearly 3.8m tonnes in

total since 2021), mainly through our full

fibre rollout that enables reductions in

personal or work-related travel

– published a new carbon abatement

methodology, to be transparent on how

we calculate savings (bt.com/carbon-

abatement)

– expanded our Digital Carbon Calculator

to include compute and end point

devices. The calculator helps our larger

customers measure, track and cut

carbon footprints across their networks.

Today, it shows customers are cutting

their CO

e by 15% on average when

transforming their networks with us

– enhanced our Carbon Network

Dashboard to include an energy

optimisation recommendation feature,

which helps our larger customers use

their networks more efficiently. It

enables them to measure, monitor

andreduce energy consumption and

carbon emissions

– hosted a Sustainability Festival at

Adastral Park. More than 1,100 people

came, including big customers, climate-

leaders, start-ups and BT Group

representatives. The event showcased

cutting-edge technologies and how to

drive sustainability and achieve net zero

emissions in various industries.

Circularity

Developing a circular economy is vital for

achieving a net zero world. Around 70%

ofglobal greenhouse gas emissions come

from material use and handling

We want to build towards being a circular

business by 2030, and a circular tech

ecosystem by 2040.

Products & Services

This year, we collected nearly 2.6m devices

from consumers and businesses through

our returns and take back processes.

cut in our energy use this year.

1.5˚C

Launched a new supplier engagement

campaign asking our suppliers to set

1.5°Caligned science-based targets.

60m

We’ve set a target to help customers

avoid60m tonnes of carbon by the end

ofMarch 2030.

BT Group plc Annual Report 2024

38 Strategic report

Our Manifesto continued

This year, we converted over 94,000

surplus BT Smart Hub 2 into

Plusnet Hub 2 routers, instead of

making new routers, which usually

creates a lot of carbon emissions.

This effort saved around 3,900

tonnes of CO

By reusing all the electronics

fromthe Smart Hub 2, we prevented

over 80,000 kilograms of new

electronics from being produced.

Read more at bt.com/

annualreview

a Circle Economy – The Circularity Gap Report 2022 circulareconomy.europa.eu/platform/en/knowledge/circularity-gap-report-2022-five-years-analysis-circle-economy

Through our EE Trade-In service we

collected 166,000 mobile devices,

pushingpast the milestone of 1m devices

traded in since its launch. For FY24, 96%

ofcollected devices went for reuse

andasecond life. The rest we recycled

responsibly. For distributed mobile

devicesour take back rate is 5%.

Wewantto increase this to at least

20%by2030.

For 2023, our return rate for customer

premises equipment was 67%. Our target

isa 75% return rate by FY26

. Customers

returned over 2.36m hubs and set-top

boxes. Through our refurbishment process,

we reused 71% and recycled the rest.

Wealso began scaling up refurbishment

ofour business hubs.

To extend the lives of our customers’

devices, our EE repair service (approved by

Apple, Samsung and Google) fixed 58,000

devices this year (up 94% on FY23).

To measure circularity in a more integrated

way, we’ve started a pilot using the Circular

Transition Indicator Tool on some of our

own brand consumer devices. We’re now

reviewing the inflows and outflows of those

devices. We aim to expand the pilot to

other business areas to implement a

common measurement approach.

Operational waste – our networks

and estate

We want to put zero waste into landfill by

2030. That means increasing the number

of things we reuse and recycle. Globally,

we generated 69,000 tonnes of

operational waste this year – 14% less

thanin FY23. Our UK recycling, reuse and

recovery rate was 92.1% (90.4% globally).

As part of modernising our network, we

continued recovering old or end-of-life

network equipment to reuse or recycle,

much of which was through our Exchange

Clearance Operations programme. This

year, we recovered 3,300 tonnes. We also

agreed a deal with a leading bank and

global recycler EMR to support the

extraction and recycling of copper cable

from our network until 2028.

Within our business, we reused 10,000

pieces of network equipment. And our

catering partner Lexington, working with

CauliBox, has been trialling new reusable

cups and containers to reduce the

numberof disposables we use.

Biodiversity

We continued working to understand our

impacts on nature and biodiversity, in line

with the draft Taskforce on Nature-related

Financial Disclosures (TNFD) framework.

This year, we ran an impact assessment of

our operations and procurement.

As part of our focus on conservation,

BTGroup has partnered with The Royal

Society of Wildlife Trusts. We provide

financial contributions to the charity and

volunteering opportunities for colleagues.

Openreach created a Business

Conservation Partnership with the RSPB,

to make sure that, moving forward, they

are better placed to implement nature-

positive actions as part of the overall fibre

build programme.

Openreach has also worked closely

withNatureScot and National Trust for

Scotland in providing fibre to Fair Isle

(between Orkney and Shetland). They

scheduled their build to make sure that

nesting birds were undisturbed during

thebreeding season, and worked together

to protect native plant species.

Water consumption

Our UK water use fell by 12% this year

to1,349,324m

, mainly from operating

adiabatic cooling units more efficiently

within network equipment operating limits,

and the pinpointing and fixing of leaks in

our water supply.

Advocacy on climate action

Corporations must advocate on climate

action. But limiting global warming to 1.5

degrees – in line with the Paris Agreement

– will need supportive policies too.

During the year we continued participating

in initiatives like RE100, the UK Electric

Fleets Coalition and EV100, Race to

Zeroand the We Mean Business Coalition.

We also supported the Fossil to Clean

campaign to advocate for speeding up the

shift from fossil fuels to clean energy.

2030

We want to become a circular business

by2030 – and build towards a circular tech

ecosystem by 2040.

20%

We have a 5% take back rate for

distributed mobile devices – we’ve set

atarget to increase this to 20% by 2030.

BT Group plc Annual Report 2024

39 Strategic report

a This target only relates to equipment which is leased to our consumers under their contract terms.

Colleagues, customers, shareholders, the communities we do business in, suppliers, UK Government

and regulatory bodies are all key stakeholders. We connect with them at all levels of our business.

That includes frontline operations, CFUs, CUs and TUs, senior leadership, the Executive Committee

and the Board and its Committees.

We engage with them in lots of different ways – from meetings and conferences to reviews, forums

andwebcasts. To understand how well we’re engaging with different groups, the Board and its

Committees get regular updates from relevant parts of the business and from stakeholders

themselves. They use them to make better decisions, give feedback and constructively challenge

activities, programmes and initiatives being considered.

BT Group plc Annual Report 2024

40 Strategic report

Our stakeholders

Our stakeholders play a crucial part in our

strategy of building the strongest foundations,

creating standout customer experiences and

leading the way to a bright, sustainable future.

Our stakeholder management group risk

category recognises just how important

they are to our business. You can read

more on page 63.

Our Section 172 statement on pages 92

to 93 gives examples of how the Board

and its Committees took our

stakeholders’ interests into account

indecision making during the year.

Colleagues

To create a culture where colleagues

canbe their best and contribute to our

purpose, ambition, strategy and success,

they need to be engaged.

So we must provide work environments

that help them flourish, give them flexible

and agile ways of working, deliver brilliant

training, development and career

opportunities, and reward performance

with fair and competitive pay and benefits.

How we engage with colleagues

Our Board gets regular updates from

theChief Executive and Chief Human

Resources Officer. Topics range from

people strategy initiatives to culture and

overall sentiment in the organisation.

This year the Board used both our

Colleague Board and our Designated

Non-Executive Director for Workforce

Engagement to engage with our

workforce(under the UK Corporate

Governance Code 2018).

You can read more on pages 90 to 91

of the Corporategovernance report.

In September 2023, we changed the way

we measure engagement. We did this to

bring it up to date with best practice and

give us better external benchmarks for

BTGroup and our units.

We introduced quarterly colleague

engagement surveys. And to compare

oldand new surveys we asked both old

andnew engagement index questions in

the first September survey. Engagement

scored pretty consistently between

oldand new measures – at 72% and

71%respectively.

Across the year engagement improved by

twopoints. We closed the year on 75% in

linewith our target. The measure

‘Gettingthings done here is straightforward’

is not making enough progress. We’re

investigating why.

Initiatives to improve our colleagues’

experience seem to be making a

difference. We’ve focused on leadership,

making things simpler for colleagues and

inclusion and diversity. We’ll continue with

this in the coming months.

Customers

We want our customers to have standout

experiences. For that, we must deliver

outstanding service and differentiated

solutions and outcomes.

We have a large and diverse customer

base, from individuals to multinational

businesses and governments. And they all

need different things. So engaging with our

customers is critical to properly understand

those varied current and future needs.

Our customers want us to:

– give them an outstanding experience and

deliver outcomes that match their needs

– deliver consistent, high-quality solutions

to keep them connected

– protect their security and data

– offer all the above at a price that’s great

value for money.

How we engage with customers:

– Our service, sales, and contact centre

colleagues regularly talk to customers

tounderstand what they need and help

them stay connected.

– Our insight centre of excellence gives

usa deeper understanding of our

customers’ needs through research

techniques and extensive internal and

external data sources.

– Our CFUs, Executive Committee and the

Board monitor how well we’re providing

standout customer experiences by

regularly reviewing metrics like NPS.

– Our Chief Executive, Executive

Committee and senior leaders regularly

review and discuss customer complaints.

– Our Customer Fairness Panel, Customer

Inclusion Panel, Security Advisory Board

and Global Advisory Board help us better

understand customers’ needs and

experiences through direct

conversations with them.

– Openreach makes sure every CP gets

equal access to our fixed network by

engaging them through a transparent

and compliant consultation process.

The results:

– We’re simplifying our contract

communication and charges by

expressing changes in pounds and

pence instead of percentages, making

itclearer for customers.

– We’re visiting every UK region to

raiseawareness and to make sure all

customers understand the simple

stepsneeded to make the move to

Digital Voice.

72/71%

Engagement scored consistently

betweenold and new measures –

at72%and 71% respectively.

75%

We closed the year with an engagement

score of 75%, in line with our target.

5,700

Interacting with over 5,700 customers

every year to better understand how

tomeet their needs.

BT Group plc Annual Report 2024

41 Strategic report

BT Group saw a surge in SMS

Smishing scams. In response, we

formed the BT SMS Scam Squad in

2022 to ensure #TrustinSMS.

Read more at bt.com/

annualreview

Prevented more than 76 million

SMS scams over the last year

from reaching victims.

76.1m

Communities

We make a significant economic

contribution to the UK communities we

serve. But we’re also at the heart of

thosecommunities, helping to bring

themtogether.

We need communities to trust us. Without

that we couldn’t deliver our growth plans

or our purpose – to connect for good.

The communities we serve

wantusto:

– give them reliable and secure

connections

– help local people and businesses

getmore from the digital world

– provide direct and indirect employment

– do business ethically and responsibly

and protect the environment.

How we engage with communities:

– Community members use our products

and services as part of their daily life

andwork.

– We provide support through retail stores

and contact centres – and through

homevisits to set up, install and

maintain our services.

– Our digital inclusion and wider societal

programmes bring digital skills training

to millions of UK people (including

children, older and more vulnerable

groups, and small businesses).

– We use customer surveys and reputation

tracking to understand community

perceptions of us and inform our focus

areas and targets. Our Executive

Committee reviews this feedback

monthly and it’s shared with the

Boardquarterly.

– The Responsible Business Committee

oversees our societal programmes –

tracking feedback and performance

through a dashboard discussed at

eachmeeting.

The results:

– Based on a report commissioned in

2023, in one year we spent more than

£9.3bn with UK-based suppliers, we

supported £1 in every £80 of UK Gross

Value-Added

and supported a total of

284,000 UK full-time jobs indirectly

– We’re one of the UK’s biggest private

sector apprenticeship employers. We’ve

hired over 3,000 apprentices and

graduates over the past five years and

we’re planning to hire over 500 more in

2024. In 2023, we were ranked second

inthe UK’s Top 100 Apprenticeship

Employers.

– We’ve expanded our full fibre network

to 3.9m rural homes and businesses as

part of our 6.2m aim by December 2026

(see page 20).

– We’re extending 4G coverage to rural

areas through the shared rural network

initiative. And we aim to reach 90% of

the UK’s geography with our 5G network

by 2027 (see page 20).

– We give extra support to around 1m

low-income and vulnerable customers

through our social tariffs and subsidised

products (see page 35).

– Our gift-in-kind contributions, colleague

fundraising and donations provided over

£134,000 to our charity partners Home-

Start UK, to support the most socially

excluded UK households.

– We helped fund UNICEF’s ‘digital

learning passport’ tech platform,

whilecolleagues raised over £35,000

tosupport their Children’s Emergency

Fund and other humanitarian

reliefprogrammes.

– Colleagues donated over £1.3m to

morethan 1,100 charities through

payroll giving.

– Colleagues volunteered more than

53,000 hours of their time to our

charitypartners and communities –

including sharing skills and expertise

through mentoring and digital skills

training programmes.

– We also support communities through

our Manifesto commitments. They

include our digital skills goal, which this

year reached a further 3.7m people and

has helped a total of 23m people since

FY15 (see pages 34 to 39).

£9.3bn

We’ve spent more than £9.3bn in one year

with UK-based suppliers and supported £1

in every £80 of UK Gross Value-Added

284,000

We supported a total of 284,000 UK full-

time jobs indirectly

BT Group plc Annual Report 2024

42 Strategic report

Our stakeholders continued

Openreach brought ultrafast full

fibre broadband to the remote

Scottish island of Fair Isle which

required an innovative engineering

solution. Our engineers built the

UK’s first fibre repeater terminal to

boost the signal enabling life-

changing connectivity as part

oftheScottish Government’s

R100programme.

Read more at bt.com/

annualreview

a Taken from ‘The Economic Impact of BT Group plc in the UK’ report 2023 at bt.com/economic-impact, commissioned every two years.

Shareholders

We have both equity and debt investors.

Our equity investors are corporates and

institutions – who hold the biggest volume

of shares – plus around 614,000 individuals.

Our debt investors are mainly financial

institutions who buy our publicly traded

bonds. They’re crucial to making sure we

have access to debt capital to finance

ourbusiness.

We have an investment-grade credit

rating based on the strength of our

balance sheet, our scale and

competitivemarket position.

Our shareholders want us to:

– deliver a return on their investment

through dividends and capital growth

– perform well against our long-term

strategy and outlook.

How we engage with shareholders

and the results:

– We engage with shareholders through

our investor relations activities, Annual

Report, financial results, AGM and

otherdocuments and briefings.

– Our AGM is a chance for Board directors

to meet shareholders. In 2023 it was

held in Birmingham with all resolutions

passed and published on bt.com/agm.

We’ll publish arrangements for the 2024

AGM in the Notice of meeting (see

page130).

– Individual shareholders interact with the

Company Secretary (or their delegate)

and also our share registrar Equiniti.

– Institutional and debt investors engage

via our investor relations team – through

one-to-one conversations, roadshows,

group meetings, conferences and

industry events.

– Through this engagement, the

Chairman, Directors, Chief Executive,

Chief Financial Officer, other executives

and our investor relations team had

222investor meetings this year.

Topicsincluded:

– our strategy and competitive position

in key markets

– our financial and operational

performance (particularly in the

context of inflation, energy and

paycosts and CPI-linked pricing)

– capital investment (including

FTTPand 5G)

– our capital allocation policy

– prospective governmental and

regulatory policy decisions

– our pension fund valuation.

– The Board gets regular reports on top

shareholders, movements in the share

engagement with investors and analysts.

It discusses and considers issues

withmanagement as part of its

decisionmaking.

The Chairman, directors,

Chief Executive, Chief

Financial Officer,

otherexecutives and

ourinvestor relations

team had 222 investor

meetings this year.

BT Group plc Annual Report 2024

43 Strategic report

Our equity investors are corporates and

institutions – who hold the biggest volume

ofshares - plus around 614,000 individuals.

614,000

Suppliers

Good supplier relationships are essential

for our success. They help us deliver the

solutions and propositions that create

standout customer experiences.

Our suppliers want us to:

– pay them in line with our agreed terms

– help them optimise their own supply

chains and cash flow management

– act ethically and transparently.

How we engage with suppliers:

We need to know who we’re doing

business with and who’s acting on

ourbehalf.

So we:

– select suppliers based on principles

around acting ethically and responsibly

– do due diligence on suppliers before

andafter we sign a contract – covering

financial health, anti-bribery and

corruption and whether they meet our

standards on areas like quality

management, security and data privacy

– check the things we buy are made,

delivered and disposed of in a socially

and environmentally responsible way

– measure suppliers’ energy use,

environmental impact and labour

standards – and work with them

toimprove these.

Operating from its Dublin base since April

2021, BT Sourced is our standalone

procurement company. It’s focused

onchallenging the traditional ways of

buying goods and services by simplifying

processes, introducing new technology

and working more in partnership with

suppliers and start-ups.

BT Sourced delivered some key initiatives

this year:

– With start-up Nnamu we developed and

piloted a ‘negotiation bot’ based on

game theory. It recommends optimum

negotiation strategies and tactics, and

negotiates autonomously.

– Autonomous AI-powered platform

Globality is being widely adopted. Its

generative AI features are speeding up

our scoping processes and streamlining

how we define what we need. Plus its

new E-Negotiation and online NDA

features are simplifying the whole

sourcing process.

– Specialist macro risk partner PRISM has

developed a digitised platform. It shares

risk reports, giving us instant access to

strategic risk information and a useful

archive. It’s a valuable resource which is

helping us make better, faster

procurement decisions.

– Our in-house negotiation analytics team

continued expanding their AI and

machine learning capabilities. To give us

a 360-degree view of our suppliers, they

combined existing internally developed

solutions with summaries of earnings

reports, news feeds, projected spend

and ESG position.

– Responding to inflationary challenges,

we strengthened our partnership with

C2FO to give suppliers better access to

competitive working capital. We also

made C2FO’s early payment solution

more widely available to thousands of

our suppliers.

– As part of BT Group’s ESG supply

chainassurance, we worked with Labor

Solutions to run a ‘worker’s voice’

surveywith five key Asia-based

suppliers. Supported by strong

identitysafeguards, the survey got

around 1,500 responses. For more

onESG, see the ESG Addendum

(bt.com/esgaddendum).

The results:

– Partnering with start-ups like Nnamu will

help us scale our digital procurement

innovations and benefit stakeholders,

buyers and suppliers.

– Buyers have so far launched more than

1,000 projects on the Globality platform,

with a total spend of roughly £7.9bn.

InDecember 2023, the platform hit a

1.1working day time-to-market, a big

improvement on the typical seven to

tenworking days with traditional

sourcing processes.

– Findings from our ‘worker’s voice’ survey

gave no major concerns. But they did

give us the chance to strengthen

relationships with the suppliers we

surveyed. We will continue and expand

the programme into FY25.

– More than 1,000 of our suppliers have

signed up to C2FO, including many small

and medium-sized businesses. In 2023

we facilitated £1.25bn in early payments.

– We’re building a more resilient supply

chain by adding our new supplier

management risk framework (including

internal controls) into our wider group

key controls framework.

– Responding to changing geopolitics,

we’re improving our crisis management

capabilities. We’re also investing in risk

intelligence to help us get a clearer view

of the macroeconomic landscape to

inform our decisions. You can read more

on our risk focus on page 61.

BT Group plc Annual Report 2024

44 Strategic report

Our stakeholders continued

More than 1,000 of our

suppliershave signed

upto C2FO and in

2023wefacilitated

£1.25bn in early

payments.

Government

We added more than £24bn to the UK

economy based on a report commissioned

last year

, supporting critical services and

working with more than 1,100 public

sector customers.

Our networks support vital public services

like welfare, tax, health, social care, police

and defence – while protecting citizens’

personal data.

Our relationship with Government bodies

underpins our three strategic pillars and

lets us contribute to policies and initiatives

that promote the best results for

stakeholders.

Government stakeholders

wantusto:

– keep investing in our network

infrastructure

– provide the fastest, most reliable and

secure connection possible, to the

widest possible range of communities

– invest in the best products and services,

at fair prices, with high levels of

customer service

– support vulnerable customers

throughtough economic times.

Our public policy work

with Government covers

awide territory, from

infrastructure investment

to national security, from

regulating online harms to

trade and economic policy.

How we engage with Government,

and the results:

– Our policy and public affairs team

manages our relationships with

Government and other politicians.

– We operate part of the UK’s Critical

National Infrastructure and support

national security.

– Our Business unit delivers and looks

after public sector contracts like the

Emergency Services Network.

– Under the Communications Act 2003,

the government can ask us (and others)

to run or restore services during

disasters. The Civil Contingencies Act

2004 also says that they can impose

obligations on us (and others) in

emergencies, or in connection with civil

contingency planning.

– We keep an open dialogue with

Government through our Chairman,

Chief Executive and senior leaders – as

well as through consultation responses

and cross-industry initiatives. Through

those conversations we build support

forpolicies that will deliver good results

for the UK and our shareholders.

– The Board comments on discussions

with Government through updates from

the Chairman, Chief Executive and

Executive Committee members.

– Our public policy work with Government

covers everything from infrastructure

investment to national security, from

regulating online harms to trade and

economic policy.

– This year, we contributed to government

initiatives including its wireless

infrastructure strategy, supply chain

resilience, data policy, drones, quantum

technologies and AI.

– We’ve given input and evidence into

legislation including the Digital Markets,

Competition and Consumer Bill, Data

Protection and Digital Information Bill,

and Online Safety Bill.

Regulators

Regulation helps protect consumers

andpromote healthy competition.

Our main regulatory relationship is with

Ofcom who regulate UK communications

and TV services. We also work with other

regulatory bodies like the Financial

Conduct Authority, Competition and

Markets Authority and the Information

Commissioner’s Office.

Our regulators want us to:

– act fairly and transparently with customers

– compete fairly in the markets we

operate in

– invest in the UK’s critical digital

infrastructure

– promote investment and innovation.

How we engage with regulators:

– We have a constructive, open dialogue

with Ofcom through our Chairman,

ChiefExecutive and senior leaders.

Conversations focus on how regulation

can support investment in world class

digital infrastructure, while keeping

themarket competitive and fair.

– At a working level we regularly engage

with Ofcom and other regulators

through industry consultations and

information requests – helping them

analyse and understand the impact

ofproposed regulatory changes.

The results:

– In 2017, we put the Commitments in

place. They give Openreach a degree of

strategic and operational independence.

We regularly engage with Ofcom and

other CPs to reassure them that we’re

following the letter and spirit of the

Commitments.

– During the year, and on the Board’s

behalf, the BT Compliance Committee

monitored compliance with the

Commitments through both our culture

and colleagues’ behaviour. Ofcom and

other stakeholders attended BT

Compliance Committee meetings by

invitation. The responsibilities previously

held by this Committee have

transitioned to both the Audit & Risk and

Responsible Business Committees for

FY25 onwards. See pages 99 and 105

formore details.

BT Group plc Annual Report 2024

45 Strategic report

a ‘The Economic Impact of BT Group plc in the UK’, Hatch – 2023 Edition, based on FY22 data.

Environment

See pages 28 to 29, 37 to 39,

49, 71 to 80, 92 and 105.

Policies

Our Health, Safety and Environment

Group Policy explains how we’re

protecting the environment and

building a more sustainable future.

Ourmain priorities are cutting

carbonemissions (our biggest

environmental impact) and being

moreenergy efficient.

It also sets out our commitment to

partnering with stakeholders. And it’s

supported by our environmental

strategy and goals of becoming a net

zero and circular business.

Every year we report on how we’re

doing in our operations and wider value

chain (see pages 37 to 39).

Due diligence

The Group Health, Safety &

Environment Sub-Committee monitors

and manages our environment strategy

and risks, acting on the Executive

Committee’s behalf.

The Responsible Business Committee

oversees progress against our

environmental goals. We review and

update our policies every year.

Results

You can read more on our plans and

performance – including progress on net

zero – on pages 37 to 39 and in our ESG

Addendum at bt.com/esgaddendum.

Risks

We consider environmental and

climate-related risks across our whole

business – including stakeholder and

supplier management, health, safety

and environment, and operational

resilience. There’s more on our group

risk categories on pages 63 to 70.

We’re mitigating our environmental

impact and key physical climate risks in

lots of ways.

You can read more on pages 37 to 39

and in our Task Force on Climate-

related Financial Disclosures statement

on pages 71 to 80.

Colleagues

See pages 24, 30 to 33,

41, 90 to 91 and 92.

Policies

Our people’s wellbeing will always be

atthe heart of our business.

It’s in our code: We always put wellbeing

and safety first. It’s also written into

ourHealth, Safety and Environment

Group Policy.

Our strategy is to build a fulfilled, safe,

happy and healthy team in a culture where

everyone can thrive. We do this through

wellbeing programmes to boost

colleagues’ performance, resilience,

happiness and engagement.

International standard ISO 45003

‘Psychological health and safety at work’

says that psychosocial risk management

must have needs from all levels and

functions – especially top management.

We agree with the concepts raised in the

standard. We apply them to help prevent

work-related injuries or ill-health in

colleagues and to promote positive

wellbeing at work.

Our Inclusion, Equity and Diversity (IED)

strategy takes a programmatic, evidence-

based approach.

It helps us understand and remove bias

and other cognitive barriers from policies,

processes, systems and decision making.

It supports our aim to build the strongest

foundations by making sure we apply an

inclusion lens to everything we do and by

promoting a healthy culture.

Due diligence

We plan against three goals – Promote,

Support and Restore.

From these we create focused, evidence-

based interventions and campaigns. They

promote the importance of wellbeing and

ensure all our people can access wellbeing

support and services.

We also work with stakeholders across the

business to make sure our wellbeing

approach is consistent, integrated and

part of our culture.

We review policies every year, updating

them when needed. We update the Board

and Executive Committee regularly.

We coordinate health and safety through

our Group Health, Safety & Environment

Sub-Committee and with our unions

through the Good Work Forum.

Well-established governance processes

make sure we integrate IED into decisions

and policy development. We report to the

Executive Committee on our strategy’s

relevance and effectiveness and on

progress against our diversity targets.

Wealso update the Board. Our People

Networks champion members’ concerns

and are sponsored by Executive

Committee members or by the CEO,

Openreach. Our Colleague Board also

helped shape and influence IED plans. We

review policies every year, updating them

when needed. You can read more about

the Colleague Board on pages 90 to 91 –

and about other ways we engage with

colleagues on page 41.

Results

There are details of what we’ve done to

apply our policy on page 33.

You’ll find information on absence rates

and other wellbeing metrics in our ESG

Addendum at bt.com/esgaddendum.

Our strategy creates a culture that

embraces IED and embeds it into

ourdecisions.

There are details of what we’ve done this

year to support our strategy – together

with the latest IED statistics – on page 24.

Risks

We reflect wellbeing as part of the people

and health, safety and environment group

risk categories on page 68.

We reflect IED risks in our people group

risk category on page 68.

BT Group plc Annual Report 2024

46 Strategic report

Non-financial and sustainability information

Social and

community

See pages 26 to 27, 34 to 39,

42, 49 and 92.

Policies

Our Manifesto is rooted in our purpose.

It’s supported by commitments on three

themes – responsible, inclusive and

sustainable.

It recognises we’ll only succeed if we

help solve some of the problems faced

by the societies and customers we serve.

In particular, our commitment to help

give people digital skills will benefit

wider society.

Our ‘BT Group charity approach’

explains how we partner with

charitiesand support our people’s

volunteering work.

Due diligence

The Responsible Business Committee:

– oversees our Manifesto commitments

and progress

– reviews our strategy and progress on

societal programmes and targets

– monitors progress against the goal of

reaching 25m UK people with help to

improve their digital skills by FY26.

Results

We report on how we invest in

communities on page 42.

You can read more on our Manifesto

and what we’ve achieved this year on

pages 34 to 39. That includes progress

on helping people improve their

digitalskills.

Risks

We consider digital inclusion risks as

part of our stakeholder management

group risk category on page 63.

Human

rights

See page 35

Policies

Our Human Rights Policy explains how

we respect and champion human rights

in our business – and through our

relationships with others. It’s supported

by our responsible tech principles. Our

Manifesto reinforces these principles

and our respect for human rights.

Due diligence

We have processes to identify and

tackle potential and actual human rights

impacts across our business. That

includes checking we’re applying

responsible tech principles when we

develop, buy, sell and use tech. Our

Responsible Tech and Human Rights

Sub-Committee oversees how we

implement the principles, giving

updates to the Responsible Business

Committee.

Respecting human rights is part of

mandatory annual training for all

colleagues.

We identify, measure and tackle human

rights impacts through our Speak Up

whistleblowing service, and through risk

assessments and on-site audits.

Results

We’ve improved our Business sales due

diligence to help us better identify and

tackle potential human rights impacts

from our products and services.

We report on our responsible tech

principles on page 35.

Risks

We consider human rights risks as part

of our stakeholder management and

supply management Group risk

categories on pages 63 and 70.

Anti-bribery

and corruption

Policies

Being trusted: our code sets out

promises including zero-tolerance of

bribery and corruption. It’s supported by

specific standards on Anti-Bribery and

Corruption (ABC), gifts and hospitality,

conflicts of interest and high risk third

parties.

The code describes how we expect

everyone who works here – or on our

behalf – to do business.

It also covers extra policy areas like

human rights, and equality and diversity.

And it provides an ethical framework for

our ambition to become the world’s

most trusted connector of people,

devices and machines.

Through our commitment to doing the

right thing, it shows how stakeholders

can depend on us.

Due diligence

We do due diligence on third parties,

engage external providers to assess

higher risk areas, and use an integrity

risk dashboard to identify potential

focus areas.

We take a risk-based approach to third-

party due diligence. We also have

enhanced approval, due diligence and

monitoring processes in place for higher

risk third parties.

In 2024, we’re launching a new system

to better manage gifts and hospitality

and conflicts of interest disclosures.

Results

All colleagues get mandatory training

on our code. We also publish

communications that reinforce policies.

Two of our quarterly colleague

engagement surveys include questions

on ethical perception, with results

shared with senior management.

Speak Up, our whistleblowing service,

lets anyone who works for (or with) us to

confidentially report anything that goes

against our code. This includes bribery,

corruption, human rights violations,

bullying or harassment. It had 744

reports this year.

Risks

We consider ABC and ethical conduct

risks within the legal compliance group

risk category – where risks apply across

our operations generally.

See page 66 for more.

BT Group plc Annual Report 2024

47 Strategic report

Financial

Year ended 31 March

Changes to our KPIs

We continue to monitor and evolve our

KPIs to ensure those reported are the best

measures against our strategy. During

FY24 we have updated our KPIs to more

accurately reflect our strategic priorities.

We now recognise ‘units on legacy’

asaKPI, which monitors customer

migration from legacy to our strategic

network platforms.

We no longer recognise the cumulative

number of people trained on digital skills

as a KPI, but we still recognise it as an

important metric and track progress – see

page 35 for more details.

Adjusted

EBITDA margin has been

discontinued as a KPI, although revenue

and adjusted

EBITDA remain KPIs.

Reported revenue

(£m)

Definition

This is our revenue as reported in our income

statement.

Performance

Reported revenue was £20,797m (FY23: £20,681m).

The increase was driven by price increases and fibre-

enabled product sales in Openreach, increased service

revenue in Consumer with annual contractual price

rises being aided by higher roaming and increased

FTTP connections, partly offset by legacy product

declines and a one-off revenue adjustment in Business.

You can read more details about CFU performance

on pages 56 to 57.

1,2,3

Link to strategy

Adjusted

EBITDA

(£m)

Definition

This measures our earnings before specific items,

net finance expense, taxation, depreciation and

amortisation and share of post tax profits or losses

of associates and joint ventures.

Performance

Adjusted EBITDA was £8,100m (FY23: £7,928m).

The increase was primarily due to revenue flow

through and cost control more than offsetting cost

inflation and one-off items; Openreach and

Consumer delivered strong EBITDA growth,

partially offset by EBITDA decline in Business due to

increased input costs and legacy high-margin

managed contract declines.

You can read more on page 52.

1,2,3

Link to strategy

Normalised free cash flow

(£m)

Definition

This measures free cash flow (net cash inflow from

operating activities after capital expenditure) after

adjusting for a number of measures, the largest

being net interest paid, payments of lease liabilities,

pension deficit payments, specific items and net

cash flows related to the sale of contracts assets.

For a full definition refer to page 232.

Performance

We generated £1,280m of normalised free cash

flow (FY23: £1,328m). This was down 4% from last

year and reflects working capital timing and a prior

year tax refund, offset by EBITDA growth and lower

capital expenditure.

1,2,3

Link to strategy

Reported capital expenditure

(£m)

Definition

This measures additions to property, plant and

equipment and intangible assets during the year.

See note 4 to the consolidated financial statements

for a reconciliation to the measures reported the

group accounts.

Performance

Reported capital expenditure was £4,880m (FY23:

£5,056m). The decrease was the result of lower

networks spend despite higher FTTP build in the

year due to reduced unit costs and efficiencies.

1,2,3

Link to strategy

Return on capital employed (ROCE)

(%)

Definition

ROCE is adjusted earnings before interest and tax as

a percentage of equity, debt and debt-like liabilities

excluding balances associated with tax and

management of financial risk. For a full definition

and a reconciliation to the nearest IFRS measure

see page 232.

Performance

ROCE for the year was 8.5% (FY23: 8.3%). This is

primarily due to slightly higher adjusted earnings

offset by increased capital employed which reflects

higher debt to fund our fibre build programme.

1,2,3

Link to strategy

BT Group plc Annual Report 2024

48 Strategic report

Our key performance indicators (KPIs)

We use ten KPIs - five operational and five financial.

We reconcile the financial measures to the closest IFRS measure on pages 230 to 233.

20,797

20,681

20,850

21,331

22,905

8,100

7,928

7,577

7,415

7,907

1,280

1,328

1,392

1,459

2,011

4,880

5,056

5,286

4,216

3,960

8.5 %

8.3 %

8.7 %

8.6 %

10.2 %

Operational

At 31 March

BT Group Net Promoter Score (NPS)

point increase/(decrease)

Definition

This tracks changes in our customers’ perceptions of

BT Group since we launched the measure in April

2016. It s a combined measure of ‘promoters’ minus

‘detractors’ across our business units. BT Group NPS

measures the net promoter score in our retail business

and net satisfaction in our wholesale business.

Performance

BT Group NPS increased by 1.0 point, (FY23: down

1.0 point) as we continue to focus on creating

standout customer experiences with perceptions

improving for Consumer, Business and Openreach.

You can read more about these and our approach to

customer experience on pages 26 to 27.

Link to strategy

Total Openreach FTTP connections

(m)

Definition

This tracks how many premises are connected to

Openreach’s full fibre (FTTP) network.

Performance

4.7m customers were connected to Openreach’s

FTTP network at 31 March 2024 (FY23: 3.1m).

Openreach’s full fibre footprint reaches nearly

14mhomes with a further 6m where initial build

isunderway, and we’re heading towards 25m

premises by the end of 2026. You can read more

about the full fibre rollout on page 20.

Link to strategy

Total 5G subscriptions

(m)

Definition

This measures the number of BT retail customers

who have a 5G subscription.

Performance

11.1m BT retail customers are able to connect to

our 5G network at 31 March 2024 (FY23: 8.6m).

Wecontinue to expand our 5G network which now

covers 75% of the UK population. You can read

more on our 5G coverage and rollout on page 20.

Link to strategy

Percentage reduction in carbon

emissions intensity (% reduction)

Definition

This measures performance against our target to

cut carbon emissions intensity by 87% by the end of

March 2031 compared to FY17 levels. It’s measured

by reference to tonnes of CO

e (carbon dioxide

equivalent) per £m value added (adjusted

EBITDA

plus employee costs).

Performance

Against our carbon emission intensity reduction

target this year we achieved a 61% reduction from

our baseline year (FY17) (FY23

: 55%). You can find

more information on what we’re doing to tackle

environmental challenges and our journey to net

zero emissions on pages 37 to 39.

Link to strategy

Units on legacy

(m)

Definition

This tracks customer migrations from legacy to

strategic network platforms, which enables our

legacy platforms to be decommissioned. A ‘unit’ is a

circuit within, or a connection to our network.

Performance

Since announcing our transformation in FY20, we

have reduced the number of legacy connections by

nearly 60% by migrating customers to Digital Voice,

4/5G and Fibre broadband.

2,3

Link to strategy

Each KPI measures how we’re doing

against at least one of our strategic

pillars. You can read more about these,

and our progress against them, from

page 19.

1_Build the strongest foundations

2_Create standout customer experiences

3_Lead the way to a bright,

sustainablefuture

Link to directors’ remuneration

The annual bonus and long-term

incentive plans that comprise our

directors’ remuneration are each linked

to certain KPIs. See the Report on

directors’ remuneration on pages 106

to 124.

Adjusted EBITDA is defined as the group profit or loss

before specific items, net finance expense, taxation,

depreciation and amortisation and share of post tax

profits or losses of associates and joint ventures, as

explained on page 232.

b Normalised free cash flow as defined on page 232.

c Includes our Consumer brands as well as Business unit

excluding Wholesale.

d Restated from 56% as presented in the FY23 Annual

Report following review of our carbon emissions.

BT Group plc Annual Report 2024

49 Strategic report

1.0

(1.0)

2.3

7.8

5.5

4.7

3.1

1.8

0.9

0.5

11.1

8.6

5.3

1.6

0.1

61 %

55 %

57 %

43 %

6.5

10.6

11.6

14.2

16.2

Alternative performance measures

We assess the performance of the group using various alternative

performance measures. As these are not defined under IFRS they

are termed ‘non-GAAP’ or ‘alternative performance’ measures.

We reconcile these to the nearest prepared measure in line with

IFRS on pages 231 to 233. The alternative performance measures

we use may not be directly comparable with similarly titled

measures used by other companies.

FY24 Capital expenditure

£4,880m

Revenue £m

£20,797m 1%

Profit before tax £m

£1,186m (31)%

Adjusted

EBITDA £m

£8,100m 2%

Operating cash flow £m

£5,953m (11)%

Normalised free cash flow

£m

£1,280m (4)%

Net debt

£m

£19,479m £620m

Earnings per share pence

@vanessa

BT Group plc Annual Report 2024

50 Strategic report

Group performance

20,797

20,681

1,186

1,729

8,100

7,928

5,953

6,724

1,280

1,328

19,479

18,859

18.5p

22.0p

8.7p

19.4p

Performance

We delivered growth in revenue and adjusted

EBITDA;

normalised free cash flow

was delivered ahead of our guidance

range; and capital expenditure was down 3%.

Financial outlook

Result

Performance

against

financial

outlook

Change in adjusted

revenue

Growth on a Sport

JV pro forma

basis Up 2% In line

Adjusted

EBITDA

Growth on a Sport

JV pro forma

basis Up 1% In line

Capital expenditure

c.£5.0bn £4.9bn Better

Normalised free

cashflow

Toward the top

end of £1.0-1.2bn £1.3bn Better

Reported revenue was £20,797m, up 1%; and adjusted

revenue

was up 2% on a Sports JV pro forma

basis due to price increases

and fibre-enabled product sales in Openreach, increased service

revenue in Consumer with annual contractual price rises being

aided by higher roaming and increased FTTP connections,

partlyoffset by legacy product declines and a one-off revenue

adjustment in Business (see note 5 to the consolidated

financialstatements).

Adjusted

EBITDA of £8,100m was up 2%; adjusted

EBITDA

wasup 1% on a Sports JV pro forma

basis, with revenue flow

through and cost control more than offsetting cost inflation

andone-off items.

We have recognised a non-cash impairment of goodwill allocated

to Business of £488m as a specific item, reflecting a decline in

profitability in recent years.

Reported profit before tax of £1,186m was down 31%, primarily

due to impairment of goodwill, increased depreciation,

amortisation and pension interest expense, partially offset by

adjusted

EBITDA growth.

Capital expenditure

of £4,880m was down 3%, primarily driven

bylower networks spend despite higher FTTP build in the year

dueto reduced unit costs and efficiencies; cash capex of

£4,969mwas down 6%.

Normalised free cash flow

was £1,280m, down 4% due to

workingcapital timing and a prior year tax refund, partly offset

byEBITDA growth and lower capital expenditure.

Financial outlook

Despite challenging macroeconomic conditions, cost of living

challenges and a highly competitive market for connectivity

services, we are still well positioned to deliver consistent and

predictable growth and value through delivery of our focused

strategy. Our outlook is underpinned by confidence in our

unrivalled assets, leading network position, strong brands, ever-

improving customer experience and continued focus on

transformation.

In FY25 we expect adjusted

revenue growth of 0-1.0% and

EBITDA of around £8.2bn.Capital expenditure excluding

spectrum will be less than £4.8bn, with normalised free cash

flowof around £1.5bn.

From FY26 to FY30, we expect consistent and predictable revenue

growth and EBITDA growth ahead of revenue, enhanced by cost

transformation. Capital expenditure will remain at less than £4.8bn

until FY26 before reducing by c.£1bn post peak FTTP build. We

expect to deliver c.£2.0bn in normalised free cash flow in FY27

andc.£3.0bn by the end of the decade.

FY25 outlook End of decade

Change in

adjusted

revenue

0 - 1.0% Consistent and predictable

growth

Adjusted

EBITDA c.£8.2bn Consistent and predictable

growth ahead of revenue

enhanced by cost

transformation

Capital

expenditure

<£4.8bn <£4.8bn to FY26

Reduces by c.£1bn post

peak FTTP build rate

Normalised free

cash flow

c.£1.5bn c.£2.0bn in FY27

c.£3.0bn by end of decade

Dividend

We have declared a final dividend of 5.69 pence per share (pps),

increasing the full year dividend to 8.00pps, a year-on-year

increase of 3.9% (FY23: 7.70pps).

We reconfirm our progressive dividend policy which is to maintain

or grow the dividend each year whilst taking into consideration a

number of factors including underlying medium-term earnings

expectations and levels of business reinvestment.

The Board expects to continue with this policy for future years, and

to declare two dividends per year with the interim dividend being

fixed at 30% of the prior year’s full year dividend.

Simon Lowth

Chief Financial Officer

15 May 2024

BT Group plc Annual Report 2024

51 Strategic report

a Adjusted EBITDA is defined as the group profit or loss before specific items, net finance expense, taxation, depreciation and amortisation and share of post tax profits or losses of

associates and joint ventures, as explained on page 232.

b Normalised free cash flow as defined on page 232.

c Net debt as defined on page 231.

d Additions to property, plant and equipment and intangible assets in the period. See note 4 to the consolidated financial statements for a reconciliation.

e Adjusted measures exclude specific items, as explained on page 231.

f Financial outlook originally provided in May 2023 was updated in November 2023 to clarify capital expenditure of c£5.0bn and normalised free cash flow at the top end of the

£1.0-£1.2bn range.

g On 1 September 2022 BT Group and Warner Bros. Discovery announced completion of their transaction to form a 50:50 joint venture (JV) combining the assets of BT Sport and

Eurosport UK. Financial information stated as pro forma is unaudited and is presented to estimate the impact on the group as if trading in relation to BT Sport had been equity

accounted for in previous periods, akin to the JV being in place historically. Please refer to Additional Information on page 233 for a bridge between financial information on a reported

basis and a Sports JV pro forma basis, which shows a decrease of £238m to adjusted revenue and increase of £71m to adjusted EBITDA.

Adjusted

operating costs

Year ended 31 March (£m)

Summarised income statement

2024 2023

Year ended 31 March £m £m

Revenue

20,797 20,681

Operating costs

(13,185) (13,244)

Depreciation and amortisation

(5,398) (4,818)

Operating profit

2,214 2,619

Net finance expense

(1,007) (831)

Share of post tax profit/(loss) of

associates and ventures

(21) (59)

Profit before tax

1,186 1,729

Tax

(331) 176

Profit for the period

855 1,905

Revenue

Reported revenue was £20,797m, up 1% due to fibre-enabled

product sales and price increases in Openreach, increased service

revenue in Consumer driven by contractual price rises, partly

offset by the prior year removal of BT Sport revenue and legacy

product declines and a one off revenue adjustment in Business

(see note 5 to the consolidated financial statements). Revenue

was up 2% on a Sports JV pro forma

basis.

You can find details of revenue by CFU on pages 56 to 57. Note 5

to the consolidated financial statements shows a full breakdown of

revenue by all our major product and service categories.

Operating costs

Reported operating costs were £18,583m, up 3% year-on-year

due to the goodwill impairment (see page 53), excluding this costs

are flat with tight cost control and the removal of BT Sport rights

and production costs, partly offset by cost inflation and one-off

items.

We have now achieved our £3bn cost savings target 12 months

early at a cost to achieve of £1.5bn, £0.1bn lower than target

(FY23: achieved gross annualised savings of £2.1bn and costs of

£1.1bn).The cumulative cash costs incurred amount to £1.5bn

(FY23: £1.1bn).

Note 6 to the consolidated financial statements shows a detailed

breakdown of our operating costs.

Adjusted EBITDA

Adjusted

EBITDA of £8,100m, up 2%, primarily driven by revenue

flow through and cost control more than offsetting cost inflation

and one-off items; Openreach and Consumer delivered strong

EBITDA growth, partially offset by EBITDA decline in Business due

to increased input costs and legacy high-margin managed

contract declines. Adjusted

EBITDA was up 1% on a Sports JV pro

forma

basis.

You can find details of adjusted EBITDA by CFU on pages

56to 57.

Profit before tax

Reported profit before tax of £1,186m was down 31%, primarily

due to impairment of goodwill, increased depreciation,

amortisation and pension interest expense, partially offset by

adjusted

EBITDA growth.

Specific items

As we explain on page 230, we separately identify and disclose

those items that in management’s judgement need to be disclosed

by virtue of their size, nature or incidence. We call these specific

items. Specific items are used to derive the adjusted results as

presented in the consolidated income statement. Adjusted results

are consistent with the way that financial performance is measured

by management and assists in providing an additional analysis of

the reported trading results of the group.

Specific items resulted in a net charge after tax of £963m (FY23:

£253m). The main components were goodwill impairment of

£488m (FY23: £nil), restructuring charges of £388m (FY23:

£300m) and interest expense on retirement benefit obligation of

£121m (FY23: £18m); partly offset by a tax credit on specific items

of £145m (FY23: credit of £308m).

Note 9 to the consolidated financial statements shows the full details

of all revenues and costs that we have treated as specific items.

BT Group plc Annual Report 2024

52 Strategic report

Group performance continued

18,062 (354) (127) (24) (76) 96 206 273 146 381 18,583

Taxation

The effective tax rate on reported profit was 27.9% (FY23:

negative 10.2%) which is higher than the UK corporation tax rate

of 25% primarily due to a non-deductible goodwill impairment,

partly offset by the UK patent box regime, which taxes some of our

UK profits at 10%. The FY23 rate was lower due to the previous

super deduction regime, the non-taxable gain on the revaluation

and disposal of the BT Sports business and the lower UK

corporation tax rate of 19%.

The effective tax rate on adjusted

profit was 20.7% (FY23: 5.8%)

for the same reasons.

At the end of FY24, we had c.£11bn (FY23: c.£8bn) of carried

forward UK tax losses.

We made income tax payments of £59m (FY23: £136m refund).

Our tax expense recognised in the income statement before

specific items was £476m (FY23: £132m). We also recognised a

£678m tax credit (FY23: £642m tax credit) in the statement of

comprehensive income, mainly relating to the increase in our IAS

19 deficit.

We expect our sustainable effective tax rate before specific items

to be around the UK rate of corporation tax, as we do most of our

business in the UK.

Earnings per share

Reported earnings per share was 8.7p, down 10.7p, while

adjusted

earnings per share was 18.5p, down 3.5p.

Capital expenditure

Capital expenditure was £4,880m (FY23: £5,056m), down 3%

primarily driven by lower network spend despite higher FTTP

buildin the year, due to reduced unit costs and efficiencies.

Cash capital expenditure was down 6% at £4,969m, with the

difference to reported capital expenditure primarily representing

the timing of government grant funding repayments.

Cash flow

Net cash inflow from operating activities was £5,953m, down 11%.

Normalised free cash flow

was £1,280m, down 4% primarily due

to working capital timing and a prior year tax refund, offsetting

EBITDA growth and lower cash capital expenditure. Year-on-year

net working capital includes £(506)m from lower utilisation of a

supply chain financing programme offset by £305m from the sale

of cash flows of contract assets relating to mobile handsets and

£105m as a prepayment for the forward sale of copper.

You can see a reconciliation to normalised free cash flow

from net

cash inflow from operating activities (the most directly

comparable IFRS measure) on page 232.

The net cash cost of specific items adjusted from normalised

freecash flow

was £439m (FY23: £404m), primarily relating

torestructuring payments.

Sports JV performance

Our joint venture with Warner Bros. Discovery (‘Sports JV’), which

has been rebranded to TNT Sports during the year, continues to

deliver a compelling sports offering after extending Premier

League rights and adding the FA Cup to its comprehensive line-up

of premium content. Underlying trading operations in FY24 were

profitable but we recognised a share of losses after tax of £41m

after adjustments made to align with the group’s accounting policies.

Goodwill impairment

We perform an annual goodwill impairment review by reference

tothe value in use of our cash generating units (CGUs) which

represent the smallest identifiable groups of assets that generate

independent cash inflows. Our CGUs are deemed to be Consumer

and Business.

Our FY24 impairment testing exercise concluded that there is

significant headroom in our Consumer CGU, consistent with FY23.

The carrying amount of goodwill allocated to this CGU at 31 March

2024 was £3.9bn (FY23: £3.9bn).

The carrying value of the Business CGU exceeded its value in use

by £488m. We have therefore booked an impairment charge

equivalent to this amount (FY23: £nil). The charge has been

recognised as a specific item.

After impairment, the carrying amount of goodwill allocated to the

Business CGU at 31 March 2024 was £3.6bn (FY23: £4.1bn). Of

the £4.1bn in FY23, £2.6bn relates to the acquisition of EE in 2016

with the rest relating to historical small acquisitions.

For more information see note 13 to the consolidated financial

statements.

BT Group plc Annual Report 2024

53 Strategic report

a Excluding depreciation and amortisation.

b Adjusted measures exclude specific items, as explained on page 230.

c Adjusted EBITDA is defined as the group profit or loss before specific items, net finance expense, taxation, depreciation and amortisation and share of post tax profits or losses of

associates and joint ventures, as explained on page 231.

d Normalised free cash flow as defined on page 232.

e On 1 September 2022 BT Group and Warner Bros. Discovery announced completion of their transaction to form a 50:50 joint venture (JV) combining the assets of BT Sport and

Eurosport UK. Financial information stated as pro forma is unaudited and is presented to estimate the impact on the group as if trading in relation to BT Sport had been equity

accounted for in previous periods, akin to the JV being in place historically. Please refer to Additional Information on page 233 for a bridge between financial information on a

reported basis and a Sports JV pro forma basis, which shows a decrease of £238m to adjusted revenue and increase of £71m to adjusted EBITDA.

Summarised balance sheet

2024 2023

Year ended 31 March £m £m

Intangible assets 12,920 13,687

Property, plant and equipment 22,562 21,667

Right-of-use assets 3,642 3,981

Derivative financial instruments 1,070 1,479

Joint ventures and associates 307 359

Preference shares in joint ventures 533 555

Cash and cash equivalents 414 392

Investments 2,395 3,577

Trade and other receivables 4,206 3,563

Contract assets 1,740 1,934

Deferred tax assets 1,048 709

Other current and non-current assets 902 849

Total assets 51,739 52,752

Loans and other borrowings 18,526 18,521

Derivative financial instruments 539 383

Trade and other payables 6,964 7,484

Contract liabilities 1,081 1,052

Lease liabilities 4,955 5,359

Provisions 649 598

Retirement benefit obligations 4,882 3,139

Deferred tax liabilities 1,533 1,620

Other current and non-current

liabilities 92 82

Total liabilities 39,221 38,238

Total equity 12,518 14,514

Pensions

The IAS 19 deficit has increased to £4.8bn at 31 March 2024, net

of tax £3.8bn (FY23: £3.1bn, net of tax £2.5bn), mainly due to the

increase in real interest rates and narrowing of credit spreads over

the period, partly offset by our scheduled contributions.

The BT Pension Scheme (BTPS) hedges inflation and interest rate

risk with reference to the funding deficit, which has resulted in the

BTPS being over hedged on an IAS 19 measure. In addition, the

IAS 19 liabilities are set by reference to corporate bond yields.

Theincrease in real yields and narrowing of credit spreads over

theperiod have therefore led to an increase in the IAS 19 deficit,

partly offset by scheduled contributions of £0.8bn. The impact of

these factors is different for the funding valuation deficit.

The 2023 BTPS funding valuation included a future funding

commitment for BT to provide additional deficit contributions

should the funding deficit be more than £1bn behind plan at two

consecutive semi-annual assessment dates. At the 31 December

2023 assessment date, the funding position was within this limit.

Further details of the BTPS triennial review can be found in note

19 – Retirement benefit plans on page 185 and in the Section 172

statement on page 93.

The movements in the deficit for the group’s defined benefit plans

are shown below:

Movements in the deficit for BT Group’s defined benefit plans

(£bn)

BT Group plc Annual Report 2024

54 Strategic report

Group performance continued

0.6 1.0

2.5 0.2 (0.9) 3.1 (1.2) 0.5 3.8

Net debt

and financial debt

Net financial debt (which excludes lease liabilities) at 31 March

2024 was £14.5bn (31 March 2023: £13.5bn), increasing mainly

due to our scheduled pension scheme contributions of £0.8bn.

Net debt

(which includes lease liabilities) was £19.5bn (31 March

2023: £18.9bn). The difference to the movement in net financial

debt reflects lease movements.

BT Group holds cash and current investment balances of £2.8bn;

the current portion of loans and other borrowings is £1.4bn.

Our £2.1bn revolving credit facility, which matures in March 2027,

remains undrawn at 31March 2024.

We remain committed to our credit rating target of BBB+

andminimum rating of BBB.

During FY24 all of the major agencies confirmed their ratings

atBBB or equivalent with stable outlook

Contractual obligations and commitments

Our principal undiscounted contractual financial obligations

asat31 March 2024 are as follows:

– Loans and other borrowings of £17,728m (FY23: £17,442m)

– Lease liabilities of £5,591m (FY23: £6,031m)

– Pension deficit obligations of £5,942m (FY23: £6,755m)

– Capital commitments of £1,049m (FY23: £1,480m)

– Device purchase commitments of £171m (FY23: £217m).

We have unused committed borrowing facilities totalling £2.1bn.

We expect that these resources, combined with the future cash

wegenerate, will allow us to settle our obligations as they fall due.

Notes 15, 19, 26 and 31 to the consolidated financial statements

give further information on these items.

Debt maturity

The graph below shows the maturity profile of our term debt.

Currency denominated balances are translated to sterling at

swapped rates where hedged.

Note 26 to the consolidated financial statements gives more

information on our debt arrangements.

Debt maturity profile

(£m)

FY25 740

FY26 566 2,012

FY27 372

FY28 1,611

FY29 1,293 548 447

FY30 777 673

FY31 1,604

FY32 498 372 716

FY33 1,155

FY34 719

FY35

FY36

FY37

FY38 498

FY39

FY40 719

FY41 442

FY42

FY43 741 64

FY44

FY45

FY46

FY47

FY48 247

FY49

FY50 389

£ debt

€ swapped to £

$ debt swapped to £

JPY swapped to £

Share buyback

We spent £133m (FY23: £138m) on our share buyback

programme. We received proceeds of £57m (FY23: £5m) from

colleagues exercising their share options.

BT Group plc Annual Report 2024

55 Strategic report

a Primarily reflects the impact on the liabilities of actual inflation being higher than assumed at the prior reporting date, which has been broadly offset by increases to inflation-linked

assets from higher inflation.

b Loans and other borrowings and lease liabilities (both current and non-current), less current asset investments and cash and cash equivalents, including items which have been classified

as held for sale on the balance sheet. Currency denominated balances within net debt are translated to sterling at swapped rates where hedged. Fair value adjustments and accrued

interest applied to reflect the effective interest method are removed. Amounts due to joint ventures held within loans and borrowings are also excluded. Please refer to note 26 of the

consolidated financial statements for reconciliation from nearest IFRS measure.

Our customer-facing units

BT Group consists of customer-facing units (CFUs), technology

units, and corporate units, as described on page 11.

We have three CFUs – Consumer, Business and Openreach.

Business started reporting as a combined unit from the start of the

financial year.

The comparative results for the year ended 31 March 2023 have

been re-presented for the impact of the creation of our Business

CFU and for changes to the methodology we use to allocate

shared central costs. See note 1 to the consolidated financial

statements for more information, and note 32 for a bridge to

previously presented financial information.

Consumer

Adjusted

revenue Adjusted

operating profit

£9,833m

£934m

2024 2023 Change

Year ended 31 March

£m £m £m

Adjusted

revenue 9,833 9,737 96 1

Adjusted

operating

costs 7,161 7,268 (107) (1)

Adjusted

EBITDA 2,672 2,469 203 8

Depreciation &

amortisation

1,738 1,603 135 8

Adjusted

operating

profit 934 866 68 8

Capital expenditure 1,175 1,221 (46) (4)

Normalised free cash

flow

1,023 963 60 6

Pro forma

adjusted

revenue 9,833 9,499 334 4

Pro forma

adjusted

EBITDA 2,672 2,540 132 5

Pro forma

adjusted

capital expenditure 1,175 1,221 (46) (4)

Pro forma

adjusted

normalised free cash

flow 1,023 1,086 (63) (6)

Adjusted

revenue growth of 4% on a pro forma

basis was driven by

service revenue growth from the annual contractual price rise, increased

roaming and increased FTTP connections. This was partially offset by a

decline in voice revenues and continued handset to SIM-only migration.

Adjusted

revenue was up 1% as per above offset by the BT Sport

disposal in the prior year.

Adjusted

EBITDA growth of 5% on a pro forma

basis with the growth in

service revenue offset by higher input costs and prior year one-off items.

Adjusted

EBITDA was up 8% due to revenue growth and rights and

production cost savings from the BT Sport disposal.

Depreciation and amortisation

was up, driven by higher mobile network,

digital and customer equipment investment.

Capital expenditure was down due to lower digital spend.

Normalised free cash flow

was down on a pro forma

adjusted basis,

with £(506)m from lower utilisation of a supply chain financing

programme partly offset by £305m from the sale of cash flows of

contract assets relating to mobile handsets along with higher EBITDA

and lower capital expenditure.

ARPU growth was strong in FY24. Broadband ARPU of £41.2 was up

5%year-on-year and postpaid mobile ARPU of £19.4 was up 9%

year-on-year.

Churn remains low despite competitive markets, with broadband and

postpaid mobile churn both 1.1%.

BT Group plc Annual Report 2024

56 Strategic report

Group performance continued

Business

Adjusted

revenue Adjusted

operating profit

£8,128m

(2)%

£646m

(28)%

2024 2023 Change

Year ended 31 March

£m £m £m

Adjusted

revenue 8,128 8,258 (130) (2)

Adjusted

operating

costs 6,498 6,313 185 3

Adjusted

EBITDA 1,630 1,945 (315) (16)

Depreciation &

amortisation

984 1,047 (63) (6)

Adjusted

operating

profit 646 898 (252) (28)

Capital expenditure 775 886 (111) (13)

Normalised free cash

flow

431 648 (217) (33)

Adjusted

revenue decline of 2% was driven by declines in legacy

products and managed contracts, adverse foreign exchange, a one-off

revenue adjustment and prior year one-offs. This was partially offset by

continued trading momentum further enhanced by inflation-linked

price rises in Small and Medium Business (SMB), and growth in Security.

Adjusted

EBITDA decline of 16% was due to higher input costs driven

by inflation, the flow through of high margin legacy declines and one-

offs. This was partially offset by the ongoing benefit of cost

transformation and revenue growth in SMB and Security.

Depreciation and amortisation

decline was driven primarily by the

timing of asset recognition in the prior year.

Capital expenditure was down due to higher customer project spend in

the prior year.

Normalised free cash flow

declined mainly due to lower adjusted

EBITDA and the timing of working capital, partially offset by lower

capital expenditure.

Retail order intake was £6.2bn on a 12-month rolling basis, down 1%.

Openreach

Adjusted

revenue Adjusted

operating profit

£6,077m

£1,775m

15%

2024 2023 Change

Year ended 31 March

£m £m £m

Adjusted

revenue 6,077 5,675 402 7

Adjusted

operating

costs 2,250 2,165 85 4

Adjusted

EBITDA 3,827 3,510 317 9

Depreciation &

amortisation

2,052 1,965 87 4

Adjusted

operating

profit 1,775 1,545 230 15

Capital expenditure 2,845 2,847 (2) —

Normalised free cash

flow

590 219 371 169

Adjusted

revenue growth of 7% was driven by CPI linked price

increases, growth in FTTP broadband base and growth in the Ethernet

base. This was partially offset by declines in the base of broadband and

voice only lines. The fibre-enabled base grew; offset by declines in the

copper base.

Adjusted

EBITDA growth of 9% was driven by revenue flow through,

improved cost transformation including lower staff numbers, partially

offset by pay inflation, higher energy costs and higher FTTP provision

volumes.

Depreciation and amortisation

was up driven by increased

networkbuild.

Capital expenditure was broadly flat with lower FTTP build unit cost

partially offset by higher FTTP build and provision volumes.

Normalised free cash flow

increase was driven by higher adjusted

EBITDA and copper forward sales, partially offset by the timing of

working capital.

Openreach broadband ARPU grew by 10% year-on-year due to price

rises and increased volumes of FTTP.

BT Group plc Annual Report 2024

57 Strategic report

a Adjusted measures exclude specific items, as explained on page 231.

b Adjusted EBITDA is defined as the group profit or loss before specific items, net finance expense, taxation, depreciation and amortisation and share of post tax profits or losses of

associates and joint ventures, as explained on page 232.

c Normalised free cash flow as defined on page 232.

d On 1 September 2022 BT Group and Warner Bros. Discovery announced completion of their transaction to form a 50:50 joint venture (JV) combining the assets of BT Sport and

Eurosport UK. Financial information stated as pro forma is unaudited and is presented to estimate the impact on the group as if trading in relation to BT Sport had been equity accounted

for in previous periods, akin to the JV being in place historically. Please refer to Additional Information on page 233 for a bridge between financial information on a reported basis and a

Sports JV pro forma basis, which shows a decrease of £238m to adjusted revenue, an increase of £71m to adjusted EBITDA and an increase of £123m to normalised free cash flow.

Building networks for the future

Openreach continue to build full fibre at

pace – creating the next generation of UK

telecommunications. Ofcom continue to

monitor these activities as they start work

on reviewing the regulatory framework

for2026-31.

We believe the current approach is

working well. It’s delivering a competitive

market and good outcomes for customers.

In May 2023 Ofcom approved our

Equinox2 pricing offer. The next stage

ofregulation must consider how to

achievethe full benefits of fibre

investment through closing the old,

coppernetworks it replaces.

Our more regional focus to rolling out

Digital Voice services is helping us work

closer with customers to support them

with this switch. A successful rollout has to

work for everyone – as shown by industry’s

recent commitments on telecare and

vulnerable customers.

Orders for broadband Universal Service

are falling as we connect more eligible

homes. The Government is currently

consulting on how to serve ‘very hard to

reach’ customers as well as the overall

future of Universal Service.

We recognise Universal Service is a vital

safety net for some customers. But we

think its scope and detail isn’t always

proportionate to the number of homes

itapplies to.

The continued transformation of UK

networks means increased scrutiny from

Government and Ofcom on security and

resilience. We’re continuing to work with

all parties to apply the 2018 Telecoms

Security Act and remove high-risk vendors

from our core network.

On 25 June 2023 we had a technical fault

with the 999 service and there was a short

time when calls couldn’t get through. We

were – and still are – sincerely sorry for the

distress this caused and are working

closely with the ongoing investigation.

We’re proud of our networks’ reliability.

We welcome the chance to work with

Ofcom as they consider resilience needs

for the future. It’s important to our

customers that we keep providing very

reliable services at affordable prices.

Pricing and competing fairly

In December 2023 Ofcom closed their

enforcement programme into in-contract

price variation terms, with no action taken

on us. But recent inflation rises have raised

concerns over the ‘CPI+’ pricing models

our industry uses. Ofcom feel this can be

confusing for customers. We’ve listened

and are introducing a new consumer

pricing model, switching from % figures

and CPI to a clear and simple ‘pounds

andpence’ view.

Work on implementing one-touch

switching continues across the industry.

This will make it easier for customers to

change providers.

We always try to look after customers who

have difficulty paying for services. We’ll

continue providing affordable broadband

and EE Mobile Basics products to eligible

customers – and support vulnerable

customers through careful judgements

ondebt and disconnection. We still

havemore customers on subsidised or

social tariffs than the rest of the

industrycombined

We’re proud of our

networks’ reliability.

Wewelcome the chance

towork with Ofcom as

theyconsider resilience

needs for the future.

It’simportant to our

customers that we

keepproviding very

reliable services at

affordable prices.

BT Group plc Annual Report 2024

58 Strategic report

Regulatory update

Today’s regulation is enabling us to build the network of the

future,while protecting and supporting our customers. We’re

workingwith Ofcom and Government on how to effectively

regulatethemarket in future.

a In line with the Policy, 50% of Simon’s annual bonus will be deferred into shares for three years.

Looking to the future:

marketandregulation

Over the coming months and years, we

look forward to working with Ofcom and

Government on some of the wider

questions about how to regulate our

network and industry.

We welcomed the conclusion of Ofcom’s

Net Neutrality Review. It gave new

guidance on traffic management and using

network resources efficiently, giving us

more flexibility in the products and

services we can offer customers.

There’s still more to be done – particularly

on better sharing the cost of developing

our network to handle significant volumes

of content.

As Vodafone and Three announce details

of their proposed merger, we continue

towatch developments and feed our

viewsinto the process. It’s important

theUK mobile market is effective and

competitive, especially around

upcomingspectrum auctions.

We support the Department for Business

and Trade’s work on ‘Smarter regulation’

inthe energy, water and telecoms sectors.

In general we feel that our sector is well

regulated – evidenced by big investment

and competition over the past few years.

But there’s always room to improve. We

support introducing a ‘growth duty’ to

make sure all regulatory interventions are

considered (and reviewed) holistically.

BT Group plc Annual Report 2024

59 Strategic report

We provide broadband for 72% of those in

the UK who take social tariffs.

72%

Reflecting on the year, it’s clear that

Openreach is doing exactly what we

setout to do for all our stakeholders.

Underpinned by government policy and

regulation, we’re upgrading the UK’s

broadband infrastructure at record pace.

Competitors have made progress.

Marketgrowth and inflation have been

challenging. Yet Openreach’s

performancehas again been strong.

As the UK’s largest wholesale broadband

company, we’re continuing to invest in

Ultrafast Full Fibre technology. From rural

villages to city centres, we’ve now passed

more than13.8 million homes and

businesses. We’re still heading towards 25

million by the end of 2026 – and we plan to

keep going, reaching up to 30m by the end

of the decade.

But we’ve always said that building the

network isn’t the end goal. We need

customers to connect to it and get the

benefits. That’s why I’m really pleased to

see 4.7m customers already upgraded

andenjoying our new platform while we

continue to drive down costs and improve

the service we give them.

Delivering for our customers

People are spending more time than ever

online, and what we deliver is important

tothem.

We have a clear focus: delivering great

service, building full fibre at pace across

the UK and upgrading customers to our

best available network.

Openreach isn’t just meeting the high bar

Ofcom has set – we’re setting our own,

even higher, standards.

Our Net Promoter Score (an assessment

direct from customers) has improved by

19.5% to 50.2% over the past year, while

our Trustpilot score is now ‘Excellent’ at 4.6.

With fibre fault rates also lower than

copper, there’s strong momentum in

improving customer experience, but

there’s always more to do.

Building efficiently and pricing

competitively

We sped up our build rate again this year,

to a peak of one million homes and

businesses in the final quarter.

By harnessing innovation and efficiencies

in our supply chain, we’ve also been driving

down the cost of reaching each premises

achieving FTTP build costs per home at the

lower end of the £250 – £350 range.

To that end, the value and quality of our

product helps us stand out in a competitive

market. Our Equinox 2 pricing offer has

now been taken up by all our major

customers – with the ability to fulfil over

36,000 orders every week. A brilliant start.

Prioritising our people

Openreach will always be a people

business, and our investment in ensuring

our people have the right skills to deliver

for our customers continues.

As more customers move to reliable full

fibre services, we’ll need fewer engineers

to support them because it’s a more

dependable platform. To that end, we’ve

stopped backfilling certain roles when

people leave or retire and we’re continuing

to flex our reliance on subcontractors.

We’re also retraining copper engineers

with fibre skills and our desk-based

teamsare exploiting new systems and

AIapplications.

We’re also becoming more inclusive

aswetry to better represent the

communitieswe serve.

Our People Networks are growing,

continuing to create a safe space for

minority colleagues and challenge us

onthe environment we create for

allcolleagues.

Acting sustainably and safely

We know our operations affect the

environment. We’ve distilled our

sustainability objectives into three

aimstohelp us focus.

We want to lower our carbon footprint,

usefewer materials and cut waste, and

make a positive impact on nature.

We’re progressing well. We’re converting

our diesel van fleet to electric vehicles –

with more than 4,100 already on the road.

And last year we recycled around 4,300

tons of copper. But there is still a long

wayto go.

Keeping colleagues, partners and the public

safe is paramount. Almost everyone at

Openreach has now completed our day-

long ‘Hearts and Minds’ safety programme

– a massive investment to refocus our

culture on physical and mental wellbeing.

We’re also keeping up our work to move

network assets away from high voltage

poles, with the project now completed.

Digital transformation

As BT Group’s deadline for retiring the

analogue PSTN approaches, we’ve

become more aware that wholesale

customers need support and encouragement

to switch to Digital Voiceservices.

We welcome new industry commitments

on better protecting vulnerable customers

and will carry on facilitating upgrades.

As more people move to full fibre we’ll also

need fewer exchanges across the UK.

Exiting these buildings is challenging and

will take many years. But it will help the

industry be more cost and energy efficient

so we’re working closely with CPs to plan

and manage this change.

An environment set for success

Finally, it’s worth reflecting on the success

of the sector.

A combination of UK Government tax

policy and Ofcom’s Wholesale Fixed

Telecoms Market Review (WFTMR) have

driven investment and fierce competition

across our industry.

An alt-net community – with access to our

ducts and poles – has added to an already

strong retail market. This is leading to better

outcomes and giving customers an even

wider choice of offers, products and services.

The framework is working. But the business

case for full fibre investments still stretches

to nearly 20 years, so what everyone needs

is a continued period of regulatory and

Government policy stability.

Meanwhile, technology change keeps getting

faster and there’ll be increasing challenges to

reach more rural, isolated communities. Our

focus will be on upgrading as many customers

as possible. And – with our unrivalled track

record in rural connectivity – we’re looking

forward to playing our part in the

Government’s Project Gigabit programme.

We’re doing well, and that wouldn’t be

possible without our people. So I want to

thank all of our colleagues who’ve worked

tirelessly to maintain that momentum

thisyear.

Mike McTighe

Chair, Openreach

15 May 2024

BT Group plc Annual Report 2024

60 Strategic report

A message from the Chair of Openreach

a For our commercial build programme only. Excludes new sites.

Our risk management framework

Risk management is integral to our

business and to achieving our strategic

priorities. Our risk management framework

makes sure that we manage risks in a smart

and structured way. It helps us reach our

goals, deliver our strategy, support our

business model and protect our assets –

while leading the way to a bright,

sustainable future.

We align risk management activities with

our strategic framework, business planning

and performance management. This helps

integrate risk thinking into key decision-

making areas. It also makes sure we share

information in a joined-up way for the

biggest impact.

How we manage risks

We divide our risk landscape into 16 Group

Risk Categories (GRCs) of enduring risks –

like People and Cyber Security – that will

not change significantly over time and can

be managed consistently across the

organisation.

For each GRC we set our risk appetite.

Thatis how much risk we’re willing to take,

underpinned by metrics with upper and

lower limits which set our tolerance. We

manage enduring risks within each GRC

through clear policies complemented by

standards and a group-wide Key Control

Framework.

We use a ‘three lines of defence’ model

todefine clear roles and responsibilities,

coordinate assurance activities and give

confidence to stakeholders that we’re

managing risks effectively.

We’re also aware of – and act on – current,

specific risks and uncertainties which are

important at a point in time and dynamic

innature. We categorise these as:

1. Point risks: Risks we can’t manage

effectively through the key control

framework, or that are materially

significant to us and need to be

managed separately.

2. Emerging risks: Uncertainties which

might be materially significant but

whose causes and impacts we can’t

presently fully define.

We align these types of risks to a GRC

based on their causes and consequences.

For point risks, we assess their potential

impacts and likelihood, assign management

ownership and decide how to best manage

the risks. We keep monitoring risks and

action plans – making changes like

agreeing new actions as needed.

We also assess emerging risks but with

different criteria. We look at potential

impacts, level of preparedness and the

time horizon. Reflecting that emerging

risks are uncertain, we also consider those

that may occur in the longer term (more

than three years).

Some emerging risks are more ambiguous

and broader than others, needing

coordinated, cross-group assessment and

action. We use our emerging risk hubs

when considering these risks. They bring

together cross-functional representatives

to share intelligence, identify potential

trade-offs and agree actions.

Our risk governance and culture

Ultimately, the Board has overall

responsibility for risk management. On

theBoard’s behalf, the Audit and Risk

Committee provides oversight of and

monitors the effectiveness of our risk

management and internal controls

systems.

Twice a year, the Board gets a summary

ofhow we’re managing key risks across

allGRCs. The Audit and Risk Committee

also holds discussions with Executive

Committee members to conduct deep

dives into specific GRCs across the year.

Each GRC has an Executive Committee

sponsor. They set our risk appetite, how we

measure our exposure to that risk, and how

we manage it within our target tolerance.

This provides accountability, ‘tone from

the top’ and joined-up risk thinking.

Each unit leadership team regularly

reviews, discusses, prioritises and acts

onrisks, aligned to GRCs. This drives

conversations about risk management

across every part of the organisation

leading to risk-informed decisions and

better business outcomes.

We have oversight bodies in place at both

unit and group level – where key risk

information gets reported regularly.

Our leaders promote a mindset of being

smart with risk when making decisions. Our

code sets expected behaviours for all our

colleagues. Ongoing training and formally

defined risk management roles also help

weave risk awareness into our culture.

Our risk management tool, ARTEMIS,

helps us consistently apply our risk, control

and assurance frameworks across BT

Group. It links risks with the relevant

controls and assurance outcomes. It also

simplifies and standardises reporting. This

helps us to make sure we’re managing risks

in a joined-up and consistent way.

BT Group plc Annual Report 2024

61 Strategic report

Risk management

Risk management taken seriously, and done simply and consistently,

helps us make the best decisions for our colleagues, customers,

shareholders and wider stakeholders in the face of uncertainty.

Itisfundamental to our strategy and performance.

Our leaders promote a

mindset of being smart

with risk when making

decisions. Our code sets

expected behaviours

forall our colleagues.

Ongoing training and

formally defined risk

management roles also

help weave risk awareness

into our culture.

Enhancing our risk management

framework

We keep strengthening how we apply our

risk management framework, in step with

our changing business and risk landscape.

This year we launched two new training

modules covering the basics of our

framework and the behaviours we expect

from our leaders. We rolled them out

across our senior leadership team and

everyone involved in making our

framework a success. The training helped

everyone understand the expectations

andbenefits risk management brings to

BTGroup.

We continue to develop our key control

framework, and this year was about

embedding it consistently across the units

with our leaders taking active ownership

for the controls in their area, making it

coreto operations, decision making

andmindset.

We focused on two things:

1. Identifying and prioritising areas that

needed strengthening.

2. Reviewing our overall approach to

howwe assess control effectiveness,

including second line assurance

activities across the GRCs to make sure

they are sufficient and proportionate

tothe risks and their impact.

An ever-changing risk landscape

We operate in a challenging external

environment. Economic uncertainty,

adverse market conditions, growing

geopolitical tensions and more regulatory

scrutiny are all impacting our risk exposure

– meaning more focus and management.

Below, we discuss some of the key

changesto our risk landscape during

thepast 12 months.

Data and AI

AI and data use are growing fast and

changing the way businesses operate.

Theregulatory landscape, technological

advancements and public awareness are

quickly evolving in step – with hard to

predict outcomes. Generative AI has the

potential to change the way we serve our

customers and how our workplace looks.

Whilst there is a lot of opportunity, it also

means we need to carefully manage risks

relating to procuring, developing, using

and selling AI solutions.

Managing AI risks cuts across many of our

GRCs. For example, we need to ensure we

invest in the right AI skills and capabilities.

We must also apply responsible

technology principles that maintain

ourstakeholders’ trust.

The growing use of AI also means relying

even more on data, which creates new

challenges and risks. Given the synergies

between the two, we’ve expanded our

Data GRC to include both data and AI.

Thiswill let us use our risk management

framework to make sure we have the right

risk appetite, standards and key controls

for increasingly material AI risks.

Market dynamics

The market is filled with challenges around

the macroeconomic environment,

competitor movements, regulatory

pressures and technological advances.

We’re managing risks related to increasing

competition in the broadband and mobile

markets, while also navigating retail pricing

pressures and making sure we treat all our

customers fairly.

We’re also closely monitoring and acting

on the risks of disintermediation by

hyperscalers as they introduce alternative

technology solutions.

The geopolitical risk landscape

Geopolitical tensions and wars across the

world – like in the South China Sea or

Ukraine – create risks to businesses like

ours. This year the conflict in the Middle

East region has amplified a wide range of

potential impacts, including disruption to

suppliers, higher energy costs and

increased cyber security threats.

Geopolitical risks can change fast and

affect various parts of our organisation.

Weuse our emerging risk hub to bring

together the right people to make action

plans as these risks evolve.

BT Group plc Annual Report 2024

62 Strategic report

Risk management continued

Generative AI has the potential to change the way we serve

our customers and how our workplace looks.

The risks set out in the following pages align with our enduring Group

Risk Categories (GRCs). Each GRC contains enduring risks, as well as

examples of the current point and emerging risks. We also include the

scenarios we’ve used for our viability analyses for each GRC.

Strategic

Strategy, technology

andcompetition

Sponsor: Chief Financial Officer

What this category covers

To deliver value to our stakeholders and achieve our strategic

objectives, we must carefully manage risks around economic

uncertainty, intensifying competition and rapidly changing

customer and technology trends. If we adopt the wrong strategy,

fail to incorporate our strategy into our business plans or don’t

effectively implement it, we could become less competitive and

hinder the creation of long-term sustainable value.

Our risk appetite

Our risk appetite sets our tolerance for managing ‘internal’ risks

associated with this category. We measure and track this through

specific metrics. We also qualitatively assess the clarity of our

strategy, robustness of our strategic analysis and whether our

business and financial plans align with our strategy. Doing this

helps us make robust strategic choices and effectively implement

them – to stay competitive and grow value for our stakeholders.

Examples of dynamic risks

Point risks:

– Macroeconomic environment factors like high inflation, high

interest rates and reduced customer confidence may lower

demand, increase customers’ price sensitivity and drive up costs.

– Intensifying competition in retail and wholesale markets could

increase churn and affect our market share.

– Disintermediation by hyperscalers could result in loss of market

share and weakened customer relationships.

– Slower than planned progress on key programmes could limit our

ability to deliver our strategy and growth ambitions.

Emerging risk:

– Failing to harness AI technologies to drive efficiencies and

generate value could make us less competitive.

Examples of what we do to manage these risks

– We research, analyse and monitor economic, customer,

competitor and technology trends to inform our strategy.

– The Executive Committee and Board regularly review

performance against our strategic priorities and targets.

– The Executive Committee and Board discuss key strategic topics

throughout the year.

– BT Investment Sub-Committee considers our investments to

make sure they are aligned to our strategy.

Scenarios considered in viability analysis

Hyperscalers strategically entering our markets

throughdirectinitiatives.

Competitive pressures from alternative FTTP

networkproviderscontinue to intensify.

Stakeholder management

Sponsor: Corporate Affairs Director

What this category covers

Stakeholder management, built on trust, is essential to us

achieving our ambitions. We engage with stakeholders fairly and

transparently to maintain strong, sustainable relationships and

manage reputational risks. We also consider risks around using and

selling emerging technologies, environment, social and

governance factors, and customer fairness.

Our risk appetite

We recognise the importance of strong stakeholder relationships

and consider them when setting strategy and making decisions.

We aim to balance our purpose and ambition with commercial

choices we think are reasonable. At times this creates tensions

when weighing up options: price rises to sustain investment, the

markets we operate in, who we buy from and sell to, the way we use

and develop technology and how we use data.

We want to keep being sector leader on reputation and trust

among professional opinion formers, and stay in our top quartile

position on ESG.

Examples of dynamic risks

Point risks:

– Protecting our customers’ interests while migrating to digital

products and closing legacy networks.

– Continued geopolitical tensions needing extra focus on

reputational risks associated with our global operations.

Emerging risks:

– Rapid advances in AI with associated stakeholder scrutiny on

things like data ethics and reskilling.

– Climate change, and perceptions of our sector’s role in carbon

emissions. See our Task Force on Climate-related Financial

Disclosures (pages 71 to 80).

Examples of what we do to manage these risks

– Our Manifesto (pages 34 to 39) sets out our commitment to

growth through responsible, inclusive and sustainable

technology. The Responsible Business Committee provides

Board-level governance.

– We monitor the media, and track our reputation across our

mainstakeholder groups.

– We engage with stakeholders to build strong relationships.

Seepages 40 to 45 for details.

– We have robust product, services and communication plans

toimprove customer outcomes.

Scenario considered in viability analysis

Potential changes in Government policy affecting our investment

and commercial ambitions.

BT Group plc Annual Report 2024

63 Strategic report

Our principal risks and uncertainties

Financial

Financing

Sponsor: Chief Financial Officer

What this category covers

We rely on the cash we generate as a business. We supplement

thisthrough capital markets, credit facilities and cash balances

tofinance our operations, pension contributions, dividends and

debt repayments.

We also focus on defining and executing the right insurance

strategy.

Our risk appetite

We fund our business based on the performance forecasts

inourmedium-term plans.

We rely on debt capital markets being open to investment grade

borrowers. We set our minimum credit rating at BBB. We invest

cash resources to preserve capital, not generate returns.

We have an agreed plan to reduce investment risk in the BT

Pension Scheme by 2034, and also plan to reduce longevity risk.

Examples of dynamic risks

Point risk:

– An uncertain macroeconomic or geopolitical environment could

increase the cost of new long-term debt or trigger contingent

deficit contributions to the BT Pension Scheme before the

2026valuation.

Examples of what we do to manage these risks

– We review our forecasted and actual business performance.

– We have formal treasury risk management processes, Board

oversight, delegated approvals and lender relationship

management.

– We review our pension schemes’ funding positions and

investment performance and agree funding valuations.

Scenarios considered in viability analysis

The BT Pension Scheme deficit worsening as a result of

macroeconomic development.

UK experiences a significant recession.

Dependence on accelerated tax depreciation to reduce cash

taxinthe short term.

Financial control

Sponsor: Chief Financial Officer

What this category covers

Our financial controls help us to prevent fraud and report

accurately. If these failed it could result in financial losses or cause

us to materially misrepresent our financial position.

We might fail to apply the correct accounting principles and

treatment, or to meet tax compliance. This could result in financial

misstatement, fines, legal disputes and reputational damage.

Our risk appetite

We want our overall financial control framework to be effective

sothat there’s less-than-remote likelihood of material financial

misstatement in our reported numbers.

We’ve defined the proportion of our financial controls that we

aimto be preventative rather than detective, and automated

rather than manual.

We take a risk-based approach to compliance monitoring –

combining sample testing and financial data analytics.

Examples of dynamic risks

Point risks:

– Not delivering our transformation programmes could affect

ourcontrol performance, efficiency and effectiveness.

– Complex and legacy systems in the lead to order process in

Business not consistently delivering expected outcomes.

Emerging risks:

– Rapidly growing ESG reporting requirements.

– Greater responsibility to prevent fraud under the

EconomicCrime and Corporate Transparency act.

– Higher chance of internal and external fraudulent

behaviourcaused by the increased living costs.

Examples of what we do to manage these risks

– We have financial and operational controls for planning and

budgetary discipline, efficient and accurate reporting, and for

reducing the risk of fraud, leakage or errors.

– We continually enhance processes, systems and our operating

model to improve and automate accounting, financial reporting

and fraud controls.

– We proactively identify, manage, investigate and report

onpotentially fraudulent activities.

– We periodically provide fraud training to colleagues that need it.

– We work with third-party experts to assess and improve our

readiness to comply with new and evolving legislation.

Scenario considered in viability analysis

A material financial misstatement leading to regulatory fines,

lawsuits and reputational damage.

BT Group plc Annual Report 2024

64 Strategic report

Our principal risks and uncertainties continued

Compliance

Communications regulation

Sponsor: General Counsel, Company Secretary & Director

Regulatory Affairs

What this category covers

We work with our regulators as they define clear, predictable and

proportionate regulations to protect customers and society – while

making sure service providers can compete fairly. We must comply

with those regulations, maintain trust and strong relationships

while delivering our vision and sustainable value growth.

Our risk appetite

We’re committed to adhering to regulations and having a strong

compliance culture. It’s a fundamental part of connecting for good.

We make decisions based on regulatory obligations. These include

protecting our customers and network, while making sure we meet

key stakeholders’ wider strategic business needs. We focus on

maintaining long-term predictable and stable regulation.

Examples of dynamic risks

Point risks:

– Digital voice migration fails to deliver in line with regulatory

obligations or expectations.

– Additional obligations from the Broadband Universal Service

Obligation review could increase costs.

– Complexities delivering the Telecommunications (Security)

Act2021 requirements.

Emerging risk:

– Ofcom’s next Telecoms Access Review could result in less

certainty on fibre regulation.

Examples of what we do to manage these risks

– We proactively engage with regulators, giving them timely and

accurate information when required.

– We try to understand our customers’ experiences – for example

when moving them on to new networks or protecting vulnerable

customers.

– Our processes help us follow regulations, build trust and enable

future dialogue with policymakers.

– We continually scan the horizon to identify regulatory changes

which may impact us, so we can put plans in place to respond.

– Our compliance and assurance programme gives our people

advice, guidance and training on regulatory requirements and

tests our regulatory controls.

Scenario considered in viability analysis

Potential regulatory changes affecting our pricing arrangements.

Data and AI

Sponsor: Chief Digital and Innovation Officer

What this category covers

We must follow today’s global data regulations while anticipating

and preparing for tomorrow’s.

Our data and AI strategy aims to create value and enable

efficiency, while giving us a robust framework for us to comply with

data and AI governance and regulation. It also includes managing

risks as we build AI solutions.

Not following data protection laws or regulations or taking a

responsible approach to AI could damage our reputation and

stakeholder trust, harm colleagues, customers or suppliers and/

orleadto litigation, fines and penalties.

Our risk appetite

We want to protect BT Group, colleagues, customers, partners and

suppliers from breaches of data protection laws and regulations.

We also want to harness our data to support and drive our

objectives and realise opportunities.

We can only achieve these aims with the right data ethics,

governance, security, protection, responsible technology and

compliance systems, processes and practices. Achieving our data

goals may require appropriate interpretation of the varied global

data protection laws, regulations and standards.

Examples of dynamic risks

Point risks:

– Recent European legislation imposing new data obligations on

data sharing and re-use.

– Using AI inappropriately could lead to a potential breach in

AIand/or data regulations and compromise sensitive data.

– New EU cyber security legislation for the telecommunications

industry may be hard to implement.

Emerging risks:

– The regulatory landscape, technology, and public awareness of

AI and use of data are rapidly evolving, leading to unpredictable

outcomes and potential new obligations or reputational impact.

– Heightened concern over harm from data use and publication

leading to increase in policies to protect consumers.

Examples of what we do to manage these risks

– We continuously run and improve our data governance programme

to tackle existing and future data regulatory risks.

– To make sure we follow our own data protection standards we

review how we use personal data across the business.

– We continue to improve our approach to managing risks around

AI(see page 62 for more).

– We horizon-scan for evolving regulations, sector developments

and new technologies that could affect our data risks, controls

and processes.

– We provide data protection and handling training and tools to

help colleagues make more risk-aware day-to-day decisions.

Scenario considered in viability analysis

An AI-related data breach, leading to regulatory investigation,

enforcement action and reputational damage.

BT Group plc Annual Report 2024

65 Strategic report

Compliance

Legal compliance

Sponsor: General Counsel, Company Secretary & Director

Regulatory Affairs

What this category covers

Our main focus areas are anti-bribery and corruption, competition

law, trade sanctions, export controls and corporate governance

obligations. Other GRCs focus on complying with other areas of

law. Across all Group Risk Categories we focus on remaining in

compliance with all substantive laws.

Our risk appetite

We want to take advantage of commercial opportunities. So we

take considered, evidenced, defensible decisions on complying

with applicable laws.

We assess risks to help us decide on proposed actions. That means

looking at the nature of the risk, the cost of compliance, the value

of the proposed actions and the steps we’d need to take to bring

them within our risk appetite.

In corporate governance, we determine the risks for a position we

take based on things like our rules and policies, market practice,

investor expectations and our stakeholders’ views.

Examples of dynamic risks

Point risks:

– Sales practices that – because of living costs or tricky market

conditions – could potentially be seen as inappropriate.

– Failing to effectively manage third-parties, leading to fines or

reputational damage.

– Evolving regulatory and litigation environment may lead to

financial and reputational impact.

Emerging risks:

– Increased regulatory burden around corporate governance

andreporting.

– New laws, changes to existing ones, or trade sanctions

responding to geopolitical dynamics or concerns in a particular

area of law.

Examples of what we do to manage these risks

– Through our Code we foster a culture where colleagues know

the standards we expect and speak up if something’s not right.

– We regularly assess risks when we give legal or compliance

advice on strategic projects, new business or commercial

operations.

– We train colleagues to know where legal and compliance risks

come from, how to handle them and when to get expert help.

– We carry out assurance on day-to-day operations, regions,

partners, projects and suppliers. We investigate and fix

anomaliesand share what we learn, where needed.

Scenarios considered in viability analysis

A breach of sanctions or export controls – leading to regulatory

investigation, fines, debarring from public contracts and

reputational damage.

We fail to successfully defend the high value claims brought

against the group.

Financial services

Sponsor: CEO, Consumer

What this category covers

We’re exposed to more financial services regulation as we attract

new consumer credit and insurance customers. We expect to

continue scaling-up and broadening these products and services

inthe coming years. That means meeting all applicable Financial

Conduct Authority (FCA) principles, rules and requirements.

Operating outside FCA rules, requirements or permissions could

harm customers and lead to fines, loss of FCA permissions, slow

service take-up and broader reputational damage.

Our risk appetite

We aim to minimise regulatory risk in two ways. First, by building

operational capabilities that help us develop our financial services

activities compliantly. Second, by maintaining a trusted

relationship with the FCA.

We monitor a range of conduct risk metrics. We focus on meeting

Consumer Duty outcomes including compliance monitoring,

complaints data and customers in collections. These are early

warning indicators of potential customer harm which we can

acton.

Examples of dynamic risks

Point risks:

– Failing to get extra FCA permissions in time to support a

plannedentry into a new market.

– Failing to meet the additional requirements of Insurance

Regulatory Framework could result in revenue loss and

regulatory fines.

– Challenges complying with the Payment Services Directive

regulation because of potential delays in us addressing Electronic

Communications Exclusion cap breaches.

Emerging risk:

– There might be a mismatch between our business strategy

andadditional FCA regulatory permissions.

Examples of what we do to manage these risks

– We scan the horizon, interpret new regulations andregularly

communicate with the regulator.

– We run mandatory training on FCA regulations, aligned to

jobroles.

– We check our financial services products and promotions are

compliant before we launch them, and every year afterward.

– We have processes in place to make sure customers get the

right outcomes.

– Our governance framework provides clear responsibility,

accountability and reporting.

Scenario considered in viability analysis

Failing to get additional FCA permissions may result in adverse

impact on product rollout and projected revenues.

BT Group plc Annual Report 2024

66 Strategic report

Our principal risks and uncertainties continued

Operational

Operational resilience

Sponsor: Chief Security and Networks Officer

What this category covers

We want to deliver best-in-class performance across our fixed and

mobile networks and IT. That means being operationally resilient

andmanaging any risk that could disrupt our services.

Service disruptions could be caused by things like bad weather,

accidental or deliberate damage to our assets.

Some service disruptions might depend on suppliers’ and partners’

reliability – making it important to pick the right ones.

Our risk appetite

We want customers to get market-leading services, underpinned

bybest-in-class network performance. To achieve that we must

prioritise resources to give the best possible service and customer

experience, while aligning with our strategy.

We aim to deliver exceptional performance for Critical National

Infrastructure, high volume (FTTC/4G) and strategic (FTTP/5G)

products whilst maintaining acceptable performance for legacy

services.

Examples of dynamic risks

Point risks:

– Power cuts, caused by energy shortages, might lead to service

disruptions.

– Increasing flood risk at non-protected sites could disrupt

services.

– Weak contracts or badly managed third-party relationships

might lead to gaps in support arrangements and extended

fixtimes.

Emerging risk:

– More frequent extreme weather events due to climate change

could impact our business operations.

Examples of what we do to manage these risks

– We have standardised processes to keep our assets resilient

across the asset lifecycle.

– We respond quickly to incidents. We reduce their impact

through geographically dispersed emergency response teams

and give customers regular updates.

– We have comprehensive testing and change management

processes.

– We do regular business impact assessments that feed into

tested, up-to-date business continuity and restoration plans.

– We make sure our operational estate has the right levels of

physical security controls in place to keep our services running.

Scenario considered in viability analysis

Crisis in the energy sector leading to winter power shortages.

Cyber security

Sponsor: Chief Security and Networks Officer

What this category covers

Our aim is to protect BT Group, colleagues and customers from

harm and financial loss from cyber security events.

We run critical national infrastructure. So a cyber attack – from

anexternal or internal threat or a third party – could disrupt both

customers and the country, and compromise data.

A poorly managed cyber security event might cost us money,

damage our reputation and impact our market share. The

regulator might also impose fines or penalties.

Our risk appetite

Cyber risk is inherent to our business, and we could suffer

significant reputational damage from a major cyber event. But

weacknowledge that we can’t eradicate all cyber risks.

Cyber security events could be deliberate or accidental, coming

from inside or outside the group. So we adapt our security position

and controls accordingly to detect and respond to evolving

threats.

We prioritise protecting our critical systems and networks, and

thedata and information they contain.

Examples of dynamic risks

Point risks:

– State-sponsored cyber attacks could target critical national

infrastructure and lead to service disruption, data loss,

regulatory action and reputational damage.

– Being exposed to suppliers with security vulnerabilities might

lead to data loss, interrupted services or reputational damage.

– Faster organisational change could create conditions where

people didn’t follow our policies, leading to a cyber security

incident.

Emerging risks:

– AI and machine learning create opportunities, but they could

also be weaponised as security threats.

– Quantum technologies could present a threat to how we protect

sensitive digital information.

Examples of what we do to manage these risks

– We have security standards, tools and processes in place to

protect our applications, systems and networks.

– We monitor external threats and gather intelligence on evolving

cyber techniques, tactics and capabilities.

– So we can quickly detect, assess and respond to cyber risks we

keep a vigilant security stance.

– We run communications, engagement and training for our

colleagues.

– We continue to invest in our cyber defences and security tools,

shifting to automation where appropriate.

Scenario considered in viability analysis

We fall victim to a widely publicised cyber attack. It leads to loss

ofcustomer data, compensation claims and enduring

reputationaldamage.

BT Group plc Annual Report 2024

67 Strategic report

Operational

People

Sponsor: Chief Human Resources Officer

What this category covers

Our people strategy is to enable a culture where every colleague

can be their best and help achieve our ambitions.

This means we must manage risk around our organisational

structure, skills and capabilities, engagement, culture, wellbeing

and diversity.

Our risk appetite

Our highest priority is making sure colleagues can work and perform at

their best. We’ll seek to avoid risks that could compromise key

business priorities, and minimise any that can’t be avoided to as low as

reasonably practicable. We avoid risks that could lead us to not

complying with applicable employment legislation.

A relatively small number of roles have a disproportionate effect

on our success. For those, we have a much lower risk tolerance of

not having the right capabilities.

To deliver our transformation and achieve our ambitions, we’re

prepared to take carefully managed short-term employee

relations risks.

Examples of dynamic risks

Point risks:

– Changes to our strategy, technology or business model could

affect what skills we need. Combined with tightened talent

markets and potentially higher attrition, that could create skills

gaps.

– Failing to drive an inclusive culture might affect our ability to

achieve our targets, and subsequently affect business results.

– Failing to make the organisational and cultural changes we need

to drive long-term success.

Emerging risk:

– Changes in working patterns, or increased financial uncertainty,

could have a negative effect on colleagues’ mental health.

Examples of what we do to manage these risks

– We have consistent performance management review

processes and goals – shared through clear organisational

structures, roles and job descriptions.

– We continually assess skills and capabilities and invest in group-

wide workforce and talent planning.

– We provide training and development opportunities for specific

roles, as well as for the future skills we need.

– Our Inclusion, Equity and Diversity strategy raises awareness,

addresses bias and promotes our People Networks and support

(more on pages 24 and 30 to 33).

– We monitor and try to improve employee engagement and

maintain close relationships with formal representative groups

and unions.

– We offer fair, competitive and sustainable remuneration to

promote smart risk taking, boost engagement and retention and

align colleagues’ and shareholders’ interests.

Scenario considered in viability analysis

A widespread lack of availability of frontline colleagues affecting

service delivery and leading to poor customer experience and

reputational harm.

Health, safety and environment

Sponsor: Chief Security and Networks Officer

What this category covers

We have diverse working environments in various locations, some

of which pose a health or safety risk. We’re committed to ensuring

the health, safety and wellbeing of our colleagues, contractors,

suppliers, customers, visitors and members of the public.

We are committed to protecting the environment and building

asustainable future, with effective environment and energy

management – and particular focus on reducing our carbon

emissions.

Our risk appetite

Health, Safety and Environment (HSE) is a key priority for the

business and is the foundation on which we operate. Our strategy

isto maintain effective HSE risk management to make sure our

employees (and others who are affected by our undertaking) and

the environment are properly protected.

We apply proactive risk management to identify, control and

mitigate significant risks across the business to a level deemed

aslow as reasonably practicable.

We consider legal, regulatory and other requirements as the

minimum obligation. We want to go beyond that – aiming for

zeroavoidable harm and the prevention of pollution.

Examples of dynamic risks

Point risks:

– Heightened risks from the additional civil and construction work

to support the full fibre rollout including harm to colleagues,

increased regulatory scrutiny, legal claims and reputational

damage.

– Failing to ensure effective in-life contractor management,

whichmay result in increased risks through sub-optimal

workingpractices, and subsequent enforcement action, legal

claims and reputational damage.

– Failing to effectively manage waste could lead to material

financialloss and reputational damage.

Examples of what we do to manage these risks

– Our group policy is underpinned by our standards and key

controls and the HSE framework is reflected in our code.

– We train colleagues and make sure they’re clear on their

responsibilities and are competent to undertake their activities.

– We make sure that colleagues and their representatives

participate in (and are consulted on) HSE matters.

– We adopt a leadership role with our contractors, helping them

improve their own HSE performance.

– We allocate appropriate resources to develop, maintain and

continually improve our HSE management system.

Scenario considered in viability analysis

A new pandemic as severe as Covid-19 causes harm to colleagues

and disrupts service delivery and business operations.

BT Group plc Annual Report 2024

68 Strategic report

Our principal risks and uncertainties continued

Major customer contracts

Sponsor: CEO, Business

What this category covers

We offer and deliver a diverse mix of major contracts which

contribute to our business performance and growth.

In a highly competitive and dynamic environment, we seek to win

and retain major private and public sector contracts. We do that

while navigating customer relationships and risk in complex

agreements – delivering highly sensitive, critical or essential

services globally.

Customer contractual terms can be onerous and challenging to

meet, which can lead to delays, penalties and disputes. Delivery or

service failures against obligations and commitments could

damage our brand and reputation, particularly for critical

infrastructure contracts or security and data protection services.

Not managing contract exits, migrations, renewals or disputes

could erode profit margins and affect future customer

relationships.

Our risk appetite

We want a diverse mix of major contracts to help our business

grow. To do that, we must build our market share, target the right

customers, make beneficial commercial and legal agreements and

deliver services successfully.

As markets change, we need to proactively adjust our portfolio of

services, countries and customers to avoid concentration risk,

stagnation and legacy dependency.

We know this involves taking on higher risk – for example, complex

customer agreements with obligations not fully covered by our

standard portfolio, terms and conditions and/or delivery

processes. We must manage this risk in the bid process and

contract lifecycle to minimise the overall impact.

Examples of dynamic risks

Point risks:

– Failing to deliver on bespoke customer data requirements

couldlead to potential breaches, fines and reputational harm.

– New IT infrastructure challenges, skills shortages, scale or

complexity could stop us delivering our digital portfolio

transformation.

Emerging risks:

– The changing competitor landscape might affect market

dynamics and competition.

Examples of what we do to manage these risks

– We have a clear governance framework to assess new business

opportunities, manage bids and monitor in-life contract risks.

– As part of bids, we check non-standard unfavourable terms and

conditions and mitigate them where we can.

– Our senior management, and a dedicated team, regularly review

our contracts.

– We support frontline contract managers with contract and

obligation management tools.

Scenario considered in viability analysis

A major incident causes reputational damage, leading to us losing

major public services contracts.

Customers, brand and product

Sponsor: CEO, Consumer

What this category covers

We want to give customers standout service, build personal

andenduring relationships, and take extra care of vulnerable

customers and customers with differing needs. We aim to keep

customer satisfaction high as we continue to migrate customers

from legacy products and services to new ones.

If we didn’t continually improve and personalise our customer

experience, it could affect customer satisfaction and retention, our

colleagues’ pride and advocacy, revenues and brand value.

Accurate and competitive pricing is important. We must also

manage product and service lifecycles, inventory and supply chain,

and meet our customer obligations and product and service

standards.

Our risk appetite

We want to be below the industry average for Ofcom complaints

and keep improving our customer NPS. We aim to maintain

customer satisfaction, launch new products and services that

benefit them and minimise issues.

We must serve customers through modern, cost-effective

platforms and minimise the number of them on expensive, old and

labour-intensive legacy products and services. We also want

customers to feel we give them personalised service through

frictionless channels.

Examples of dynamic risks

Point risks:

– Failing to switch customers (including those who are vulnerable

or have differing needs) from old to new service platforms could

interrupt their service, cause customer churn and/or lead to

regulatory intervention.

– Failing to make sure we have the right current and future skillsto

serve our customers could lead us to not meet customer

expectations, lose customers or market share and harm our

reputation.

Emerging risk:

– Customer trust and confidence in future AI solutions.

Examples of what we do to manage these risks

– We keep our promises on the service levels customers should

expect and we track a range of customer experience

performance metrics while continuing to improve service.

– We have processes in place to identify and serve vulnerable and

differing needs customers.

– We have clear and comprehensive brand guidelines.

– We work with suppliers to manage relationships and risks.

– We design new products and services (and pilot them where

possible) to make sure they benefit customers.

– We have a colleague retention and skills development plan to

make sure we’re not short on key skills.

Scenario considered in viability analysis

A defect in a customer’s device – leading to a full product recall

and a significant service disruption.

BT Group plc Annual Report 2024

69 Strategic report

a Excluding Openreach, which has separate GRC sponsorship and management.

Operational

Supply management

Sponsor: Chief Financial Officer

What this category covers

We have a lot of suppliers. Successfully selecting, bringing on

board and managing them is essential for us to deliver quality

products and services.

We must make decisions about suppliers on concentration,

capability, resilience, security, costs and broader issues that could

impact our business and reputation.

Our risk appetite

Our appetite guides buying decisions. That includes sole or dual

sourcing for products or services that support key business aims or

activities – or where alternative sources aren’t economically viable.

To get the best commercial rates and operational resilience we

continuously engage with and challenge key suppliers on pricing,

without introducing service and/or delivery risks.

Properly managing so many third parties needs effective

governance. So we have a low appetite for dealing with suppliers

outside of our defined policies or processes.

We have to make sure third parties don’t expose our brands to

damage. That means avoiding – or stopping working with – any

that don’t meet our standards on key areas like human rights.

Examples of dynamic risks

Point risks:

– Increased energy prices, supply shortages and inflation could

affect cost-cutting targets and future investments.

– Geopolitical tensions (like the Russia-Ukraine war and

escalations in the Middle East) could disrupt supply chain,

raisecosts and inflation, and increase cyber security threats.

Emerging risks:

– A difficult economic environment could put pressure on smaller

suppliers.

– Extreme climate conditions might disrupt supply chains.

Examples of what we do to manage these risks

– Our sourcing strategy uses different approaches to managing

risk by category. That includes standard terms and conditions

and controls so we can make purchasing decisions efficiently

and effectively.

– We have comprehensive supplier due diligence, contract

management, on-boarding processes and are reviewing

andimproving our in-life assessment process.

– We have robust supplier risk management, performance,

renewal and termination processes.

– We do demand planning and forecasting, stock counts and

inventory management so we have supplies available.

– We get assurance that the goods and services we buy are made,

delivered and disposed of responsibly. That includes monitoring

energy use, labour standards and environmental, social and

governance impacts.

Scenario considered in viability analysis

Increasing geopolitical tensions lead to supply chain disruptions

and cost inflation.

Transformation delivery

Sponsor: Chief Financial Officer

What this category covers

We’re accelerating transformation delivery to build a simpler,

more efficient and dynamic BT Group.

We’re modernising our IT, automating processes with AI,

streamlining our product portfolio and migrating to next-

generation strategic networks. All this will deliver significant cost

efficiencies – while also improving our customers’ and colleagues’

digital experiences.

Failing to manage transformation execution risks could make us

less efficient and damage our financial performance and customer

experience.

Our risk appetite

We’ve defined the risk level we’re willing to tolerate for

transforming our products, customer journeys and technology.

Wetrack specific metrics to check we’re achieving genuine,

sustainable transformation outcomes and not just cutting costs.

Delivering within our risk appetite will give us competitive

advantage, enable faster delivery, improve customer experience

and make sure our costs benchmark favourably with peers.

Examples of dynamic risks

Point risks:

– Failure to manage complex interdependencies to complete the

migration of customers and close legacy IT and networks.

– The volume and complexity of our transformational activities

across different parts of the group, combined with day-to-day

business, could dilute our efforts and stop us reaching our

sustainable transformation goals.

Emerging risk:

– Delays in switching customers onto new, strategic products

could slow or stop us closing our copper network and exchanges.

Examples of what we do to manage these risks

– We review transformation performance at monthly Executive

Committee meetings – managing dependencies, making

informed decisions and removing blockers.

– We have strong governance, with senior leaders owning specific

operational and financial outcomes. Each quarter we assess our

performance – allocating funding to the programmes delivering

the most strategic value.

– We invest in digital and data capabilities to cut costs, grow

revenue and make sure we have the right resources to deliver

sustainable change effectively.

– We invest in our people strategy to make sure we have the right

skills and culture needed to deliver transformation.

Scenario considered in viability analysis

We are not able to execute the transformation plans we need

todeliver savings initiatives.

BT Group plc Annual Report 2024

70 Strategic report

Our principal risks and uncertainties continued

We assess and report on how we manage

the impact of climate-related risks and

opportunities on the group. We detail

here how we’re complying with the Task

Force on Climate-related Financial

Disclosures (TCFD) recommendations –

our ‘TCFD disclosure’.

– Under FCA Listing Rule LR 9.8.6(8) as a premium listed

company we have to explain how we’re complying (or not)

withthe TCFD framework. We also have to comply with

requirements of the Companies Act 2006, as amended by the

Companies (Strategic Report) (Climate-related Financial

Disclosure) Regulations 2022.

– We believe the following climate-related financial disclosures

are consistent with the TCFD framework and therefore comply

with Listing Rule 9.8.6(8) and Companies Act requirements –

summarised in Table 1: TCFD Compliance Summary.

– Where relevant, we’ve accounted for TCFD guidance and the

Financial Reporting Council’s recent recommendations on

materiality around governance, strategy, risk management,

andmetrics and targets.

– We’ve integrated climate-related disclosures throughout this

report. So in some areas we’ve cross-referenced to another

section with the relevant information.

– The information in this TCFD section has been reviewed to a

high level of assurance against AccountAbility’s AA1000AS v3

assurance standard.

In this year’s TCFD disclosure, we’ve:

– updated our scenario analysis by expanding our assessment

ofphysical climate risks to our global sites and global suppliers

andby calculating the financial opportunity from our carbon

abatement solutions

– disclosed the metrics and targets we use to monitor

performance on our climate risks and opportunities

– updated our disclosure of our remuneration policy which was

updated in FY24, describing how we consider our climate

performance in remuneration.

BT Group plc Annual Report 2024

71 Strategic report

Task Force on Climate-related

Financial Disclosures

We have cut our operational carbon

emissions intensity by 61% since FY17.

61%

Table 1: TCFD Compliance Summary

TCFD Recommendation

Compliance

Status Section reference

Governance

1 Board’s oversight of climate-related risks

and opportunities

Full TCFD section: Our climate change governance – Board oversight on

climate change (page 73)

Corporate governance report: Our governance structure (page 85)

and climate governance (page 105)

2 Management’s role in assessing and

managing climate-related risks and

opportunities

Full TCFD section: Our climate change governance – Management’s

roles and responsibilities (page 73)

Corporate governance report: Our governance structure (page 85)

and climate governance (page 105)

Strategy

3 Climate-related risks and opportunities

(short, medium, long term)

Full TCFD section: Climate change strategy – Planning climate risks and

opportunities across different time horizons, Analysing our strategy

using climate scenarios (page 74 to 76)

4 Impact of climate-related risks and

opportunities on the business, strategy,

and financial planning

Full TCFD section: Climate change strategy – Embedding climate change

into our strategy (page 77 to 78)

Strategic report: Our Manifesto - Sustainable (pages 37 to 39)

5 Resilience of the organisation’s strategy,

considering different climate-related

scenarios, including a 2°C or lower

scenario

Full TCFD section: Climate change strategy – Analysing our strategy

using climate scenarios (pages 74 to 78)

Risk management

6 Processes for identifying and assessing

climate-related risks

Full TCFD section: How we manage climate risks (page 78)

Strategicreport: Risk management framework (pages 61 to 70) and

climate-related GRCs (pages 63, 67 and 70)

7 Processes for managing climate-related

risks

Full TCFD section: How we manage climate risks (page 78)

Strategic report: Risk management framework (pages 61 to 70) and

climate-related GRCs (pages 63, 67 and 70)

8 Identifying, assessing, and managing

climate-related risks, and integration into

overall risk management

Full TCFD section: How we manage climate risks (page 78)

Strategic report: Risk management framework (pages 61 to 70) and

climate-related GRCs (pages 63, 67 and 70)

Metrics and targets

9 Metrics to assess climate-related risks and

opportunities in line with strategy and risk

management processes

Full TCFD section: Our climate metrics and targets – Metrics and targets

to measure and monitor risks and opportunities (page 79)

10 Disclose Scope 1, Scope 2, and, if

appropriate, Scope 3 GHG emissions, and

the related risks

Full TCFD section: Our climate metrics and targets – Our worldwide

energy use and greenhouse gas emissions (page 80)

Strategic report: ESG Addendum at bt.com/esgaddendum

11 Targets used to manage climate-related

risks and opportunities, and performance

against targets

Full TCFD section: Our climate metrics and targets – Metrics and targets

to measure and monitor risks and opportunities, Our worldwide

energy use and greenhouse gas emissions (pages 79 to 80)

Strategic report: Our Manifesto - Sustainable (pages 37 to 39) and

ESG Addendum at bt.com/esgaddendum

BT Group plc Annual Report 2024

72 Strategic report

Task Force on Climate – related Financial Disclosures continued

Our climate change governance

We set out here the internal governance bodies, processes and ways in which we identify and manage

climate-related risksandopportunities.

Board oversight on climate change

The Board

The Board is responsible for how we identify and manage climate-related risks. Matters reserved to the Board

include items of big strategic importance – things that directly impact the group’s funding position, reputation,

integrity or ethical standards.

Responsible Business

Committee

This Committee oversees our

climate change strategy,

programme and goals. It meets

at least three times a year to

monitor progress on our long‐

term responsible business goals –

including climate change. It also

assesses the sustainability

underpin relative to our

Restricted Share Plan, and makes

recommendations to the

Remuneration Committee. The

Chair reports to the Board after

each meeting. There’s more

about the Responsible Business

Committee on page 105.

Audit & Risk

Committee

This Committee monitors and

assesses our risk management

and internal control systems’

effectiveness on the Board’s

behalf. That includes climate

change risks which span a

number of different group risk

categories (GRCs). You can read

more about this Committee on

pages 99 to 103 and more about

our GRCs on pages 63 to 70.

Remuneration

Committee

This Committee agrees the

remuneration framework for the

Chairman, Executive Directors,

and members of the Executive

Committee. It also monitors

remuneration practices and

policies for the wider workforce.

In FY24 we updated our

sustainability-linked

remuneration. We have a

sustainability underpin relative

toour Restricted Share Plan

forExecutive Directors, which

youcan read more about on

page 106.

Management’s roles and responsibilities

Chief Executive

The Chief Executive is responsible for our environmental policy and performance. That includes climate-related issues.

TheChief Executive approves our targets – including those on net zero, circular economy and customer carbon avoidance.

Group Health, Safety & Environment Sub-

Committee

Our Group Health, Safety & Environment (GHSE) Sub-

Committee meets quarterly and manages a range of risk

and compliance issues – including climate change – on

the Executive Committee’s behalf and reports back

regularly. It’s chaired by our Chief Security and Networks

Officer – an Executive Committee member – and made

up of senior leaders from across the business. The GHSE

Sub-Committee reports Health, Safety, and

Environmental performance to the Board monthly,

including our energy consumption.

Executive Committee

The Executive Committee sets our operational strategy

on climate change and sustainability. It also monitors

associated progress, performance and risks – supported

by our responsible business team.

BT Group plc Annual Report 2024

73 Strategic report

Climate change strategy

Planning climate risks and opportunities across

different time horizons

We think about climate risks and opportunities over the short,

medium and long term. Our timeframes consider our risk

management framework, financial planning processes, external

legal and regulatory changes and the longer-term nature of

physical climate changes.

Short-term (0-3 years)

This timeframe considers the chance of events exposing us to

riskover the next three years, in line with our risk management

framework. We factor in acute physical risks like flooding and

higher temperatures into our annual plans. This helps us to adapt

and reduce the impact on our business or value chain.

Medium-term (3-5 years)

This timeframe aligns to our financial planning process,

whichusesa five-year horizon.

Long-term (5-20+ years)

This timeframe matches our investment timeframes for strategic

assets like networks that we plan over longer periods – sometimes

up to 20 years. It also influences our strategy, targets and plans for

responding to climate change’s bigger risks and transitional

implications. Our scenario analysis considers risks in 2050 and

beyond, and our long-term climate targets extend to FY41.

Analysing our strategy using climate scenarios

We use scenario analysis to understand what risks and

opportunities could affect us in the long term. This year we

focused on advancing our financial impact modelling, and

establishing metrics to monitor our progress in managing

theserisks and opportunities.

Our scenario analysis process

We try to identify and assess the risks and opportunities likely to

have the most material financial impact on our business – like on

revenues, current and future potential costs, including capital.

We use different scenarios to assess our climate risks and

opportunities from physical impacts and the move to a low-carbon

economy. We’ve based our scenarios on the Intergovernmental

Panel on Climate Change (IPCC)

, Network for Greening the

Financial System (NGFS) and International Energy Agency (IEA),

among other sources

The table below shows the different climate-related scenarios

we’ve considered to help test our organisational strategy’s

resilience. Shared Socioeconomic Pathways (SSPs) are IPCC’s

climate scenarios.

Table 2: BT Group’s Climate Scenarios

Transition scenarios Physical scenarios

Name Temperature equivalent

scenarios (°C warming by

2100 above preindustrial

levels)

Description Name Temperature equivalent

scenarios (°C warming by

2100 above preindustrial

levels)

Description

Current Policies

(CP)

3 High emissions

Emissions keep

rising as no extra

climate policies are

implemented from

today.

SSP5-8.5 4.4 High emissions

Emissions keep rising

at current rates with

no policy changes.

Delayed Transition

(DT)

1.6 Low emissions

Emissions keep

rising until 2030.

After 2030, climate

policies are put in

place and are scaled

rapidly to hit net

zero by 2050.

SSP2-4.5 2.7 Intermediate

emissions

Emissions peak

around 2060 and

then fall.

Net Zero (NZ) 1.5 Low emissions

Climate policies are

implemented from

today and become

more stringent over

time, allowing

society to hit net

zero by 2050.

SSP1-2.6 1.8 Low emissions

Emissions halved by

2050, achieving net

zero around 2075.

BT Group plc Annual Report 2024

74 Strategic report

Task Force on Climate – related Financial Disclosures continued

a We derived projections from the World Climate Research Programme’s Coupled Model Intercomparison Project (version 5 and 6/ CMIP5 and 6) and the Coordinated Regional

Climate Downscaling Experiment. Other data sets include high precision flood data and country-level climate data from the NGFS.

b We modelled transition risks and opportunities using data from NGFS phase 4. Carbon prices are derived from equivalent scenarios from the IEA, to represent an explicit carbon tax.

In line with TCFD guidance and requirements

, we modelled the

impact on our current strategy and business plan – using current

decarbonisation plans and the commitments in our medium

termplan.

For some transition risks and opportunities, we present the

financial impacts of different action we could take – to show worst

and best case scenarios.

For physical risks, we present the financial impacts for our UK

andglobal sites, considering our most critical network building

assets such as our telephone exchanges and data centres. This

does not include mobile phone masts, telephone cabinets, or

cable infrastructure.

This year, we assessed physical risks in our supply chain, looking at

28 critical suppliers. We assessed this with country-level climate

data considering our suppliers’ main country of operation. We

assessed the impact of more flooding, more intense, longer and

more frequent heatwaves and extreme weather events. As we

collect more accurate locations of our suppliers and logistics

network, we plan to refine this analysis and expand to other

climate hazards such as drought.

We’ve presented the final outputs in annualised nominal terms.

We haven’t applied social discount factors to avoid double

counting with our financial models. We categorised the financial

effects using our risk management framework, and treated each

risk and opportunity as mutually exclusive events.

The results of our analysis

We think our strategy is resilient to climate risks and is well

positioned to capture climate opportunities in the modelled

scenarios. The tables below summarises our prioritised climate

risks and opportunities for the different scenarios we considered.

We’ve concluded that climate risks and opportunities don’t have

amaterial effect on our FY24 financial statements disclosures.

Asweanticipate that the magnitude of climate risks and

opportunities will change over time, we’ll closely monitor our

risksand opportunities and expand the assessment as part of

continually assessing climate risks.

In high emissions scenarios (CP and SSP5-8.5), physical risks have

a greater impact than transition risks, as these are driven by more

frequent and severe weather, particularly in the longer term. Our

analysis looks at direct climate change impacts on the most

material areas of our business. It doesn’t include secondary

effects– like forced migration or geopolitical tensions –

resultingfrom climate change.

We recognise the very severe consequences this scenario could

have globally. We’re working to play our part in decarbonising

ourown operations and value chain to help avoid it.

At the same time, we’re making sure we prepare for increasingly

severe and frequent climate-related hazards. We’re investing in

flood defences, cooling upgrades and better analytics data to

make sure that our network is resilient.

Conversely, we expect transition risks to have a greater impact

under low emissions scenarios (DT and NZ). That’s because

they’re driven by changes in policy and regulation as well as

stakeholders’ behaviour (including customers).

There are also opportunities linked to the low-carbon transition –

like developing carbon abatement solutions to help customers cut

emissions, and cutting energy costs through efficiency measures.

DT scenario trends are similar to NZ – but with the impact on the

business happening sooner under NZ.

We’re acting to reduce risk across the various climate-related

scenarios, with an emphasis on long-term resilience.

Table 3: Summary of our physical risks from climate change

Relative impact

Prioritised risk or

opportunity

Time

horizon

Description Potential financial impacts 2030 2040 2050

More flooding

Long More frequent and severe

flooding, increasing

damage to BT Group

infrastructure.

– Higher costs to repair damaged assets.

– Lower revenue from network disruption.

SSP5-8.5

SSP2-4.5

SSP1-2.6

More intense,

longer and more

frequent

heatwaves

Long Higher temperatures and

more frequent heatwaves,

affecting BT Group

operations and leading to

increased energy

consumption for cooling.

– Higher energy costs from extra cooling

demands for equipment and operations

during high temperature periods.

– Lower productivity from labour hours lost

through heat stress.

SSP5-8.5

SSP2-4.5

SSP1-2.6

More intense,

longer and more

frequent

extreme weather

events

Long Storms and extreme wind

damaging assets that then

need repairing – affecting

our service, increasing

maintenance costs and

reducing revenue.

– Higher costs to repair damaged assets.

– Lower revenue from network disruption.

SSP5-8.5

SSP2-4.5

SSP1-2.6

Supply chain

disruption from

physical climate

risks

Long More extreme, frequent

and severe flooding, heat

and weather events

disrupting our supply

chain.

– Pass through costs from suppliers dealing

with physical hazards.

SSP5-8.5

SSP2-4.5

SSP1-2.6

BT Group plc Annual Report 2024

75 Strategic report

a TCFD: Implementing the Recommendations on the Task Force on Climate-related Financial Disclosures.

b The time horizon where impact is potentially the greatest.

c We produced high precision flood data for two epochs: 2030s (2021 to 2040) and 2050s (2041 to 2070) to capture the potential range of flood effects in the future. The results

presentedshow the effects of flooding for an average year in each of these epochs. 2040 results are an average of 2030 and 2050 to aid comparison with the other risks and

opportunitiesthat we’ve explored.

Table 4: Summary of our transition risks and opportunities from the transition to net zero

Relative impact

Transition risk /

opportunity

Time

horizon Description BT Group scenario Potential financial impacts 2030 2040 2050

Changing

customer

expectations

andhow they

seeus

Long Risk: Customers have

risingexpectations on

corporate climate action.

Ifwe lag behind peers on

decarbonisation, we could

lose customers.

Our emissions

decline slowly,

following a

current policies

scenario

Lower revenue from

customer churn

Opportunity: By

differentiating ourselves asa

climate change leader and

hitting our net zero targets,

our revenues couldgo up.

We hit our

netzerotargets

Higher revenue

fromourimproved

reputationon

climatechange

Carbon pricing

and taxation

Medium Risk: Regulatory and

governmental policy changes

could introduce carbon

pricing and taxation.Carbon

pricing might hit some

suppliers hard and early.

Those suppliers might pass

onextra costs to us.

Our emissions

decline slowly,

following a

current policies

scenario

Higher operating

costs

We hit our net

zero targets

Cost of capital Long Risk / opportunity: Our debt

interest rate might change –

depending on our net zero

progress. Long term interest

rates could also change due

to climate policy and

investment. On the equity

side, shareholders could

choose to invest or withdraw

funds depending on our net

zero progress.

Our emissions

decline slowly,

following a

current policies

scenario

Higher or lower cost

of capital

We hit our net

zero targets

Carbon

abatement

solutions

Short Opportunity: There might be

increased demand for our

carbon abatement solutions,

telematics and carbon

dashboards.

We roll out our

current plans to

grow revenue for

these products

Higher revenue from

abatement products

Energy pricing

and efficiency

Short Opportunity: Improving our

networks’ and sites’ energy

efficiency could lower our

operating costs (even with

higher energy prices in the

scenario).

We roll out our

current energy

efficiency plans

Lower operational

costs

Relative financial impact key

Risk Limited Low Moderate High Very high

Opportunity Limited Low Moderate High Very high

Financial impact < £5m £5m-£50m £50m-£250m £250m-£1bn >£1bn

BT Group plc Annual Report 2024

76 Strategic report

Task Force on Climate – related Financial Disclosures continued

Embedding climate change into

ourstrategy

Responding to our main physical risks

Our exposure to physical risks changes over time. Rolling out full

fibre and closing our legacy networks will mean fewer physical

network sites. That will cut our exposure to physical climate

change risks (but does mean more services going through

feweroperational locations).

On top of that, full fibre is more ‘passive’ (with no electronics

between exchanges and connected properties) – further

mitigating the risk of flooding, or extreme heat or weather

damaging our equipment.

Our insurance policies cover claims on asset loss and damage

which also lessens any potential financial impact of climate and

weather events.

More flooding

In line with our future location strategy, last year we completed

ananalysis of possible flood risks from climate change across

different climate change scenarios.

This year we used that analysis to decide where to invest in

measures to help us minimise – or respond faster to flooding.

These include installing and upgrading sump pumps and

bulkheads at our sites. We also updated the site analysis with

thelatest data to keep it accurate and up-to-date.

We’re expanding our climate change flood risk assessments to

help us make decisions on future strategic locations. This year

wetrialled using drones to survey potential risks around water

getting into the fabric of our buildings.

More intense, longer and more frequent heatwaves

In most scenarios from 2030-2050 the UK will see more extreme

heat days. We have been undertaking a programme of cooling

upgrades at our core network and mobile sites, which allow them

to operate effectively in up to 45°C external temperatures.

This year we’ve invested nearly £3m in these upgrades at our

larger core metronode sites. We’ve also finished upgrades in our

strategic data centres and upgraded cooling plants at our mobile

core sites.

In our local exchanges, we’re installing and upgrading cooling

plants with adiabatic units, which use fresh air and water

evaporation, making us less reliant on refrigerant gases. They

workbest on the hottest days – well suited to the rising ambient

temperatures of different warming scenarios from 2030-2050.

This year we’ve invested £5m on cooling system upgrades for

localexchanges.

To reduce energy costs from cooling, we’ve increased the base

temperature in sites across our network while maintaining optimal

temperatures for our equipment.

More intense, longer and more frequent extreme

weather events

Our extreme weather processes minimise service disruption.

Wecontinually scan the weather horizon to get early warning

ofpotential weather-related risks, allowing us to prepare and

launchdefences. In extreme weather, our processes help us

manage risks and prioritise restoring services – so customer

impacts are minimised.

We had ten extreme weather events in the winter of 2023/24.

Ourpreparation, management and strong infrastructure made

sure they caused no major service disruptions.

We track storm, temperature, rainfall and impact data. We use

italongside climate projections to calculate current and

futurerisks.

Supply chain disruption from physical climate risks

This year we assessed physical climate risks in our supply chain.

Wehave strong supply management risk processes in place. They

include comprehensive supplier due diligence, engaging with and

challenging key suppliers on pricing and supply chain diversity, and

demand planning and forecasting.

Managing our transition risks and opportunities

Cutting emissions in our value chain and hitting our net zero

targets should mitigate the impact of carbon pricing, cost of

capital, energy pricing volatility and reputation risks. It will also

support the UK’s commitment to becoming a net zero economy

by2050. Our carbon reduction plan explains what we’re doing to

cut our operational and value chain emissions.

See bt.com/carbonreductionplan for more information.

Changing consumer preferences and how they see us

We track changing customer preferences. We reflect this in how

we engage with them and how we talk about our climate progress

in customer communications and bids.

As well as opportunities around strategy and targets, our climate

change actions help us stand out from the competition. We were

one of the first companies to join initiatives like RE100, the CDP

supply chain programme, and 1.5°C Supply Chain Leaders.

Supportive policies are critical to both our group and wider

societyto keep within the 1.5°C warming limit. So we work with

regulators and policymakers to advocate for regulation to

createthis policy environment.

We also work with peers through associations like GSMA, techUK,

Joint Audit Cooperation and the European Green Digital Coalition

to build knowledge and expertise on ICT’s potential to help

decarbonise other sectors. We work with policymakers too –

toinspire others (like small and medium-sized enterprises) –

totake climate action.

Carbon pricing and taxation

We’re not directly in the scope of a carbon pricing scheme.

Butwetrack developments and prices in the UK and other

relevant jurisdictions.

BT Group plc Annual Report 2024

77 Strategic report

Cost of capital

The Board oversees our debt status. We also have formal treasury

risk management processes, delegated approvals and lender

relationship management to manage credit risk across the group

– including climate-related risks.

On the equity side, we engage regularly with shareholders through

our investor relations team – including discussions on our ESG

performance.

Carbon abatement solutions

There are lots of ways for customers to cut their carbon emissions

(and associated climate risks) through our products and services.

Most of our solutions reduce the need to travel, lower energy use

and cut material and manufacturing needs.

Partnering with sustainability tech company QiO, we’ve launched

an AI-powered edge computing solution to help our business

customers cut carbon by optimising their energy use.

We’ve also introduced real-time energy and carbon dashboards

for bigger customers to help them estimate their networks’ carbon

footprints and cut emissions. We’re collaborating with Johnson

Controls to help customers digitalise their buildings and optimise

their heating, ventilation and cooling systems to reduce energy

and carbon.

Energy pricing and efficiency

Transforming our operating model includes making the group

asenergy efficient as possible. And we’ve already done a lot to

cutour energy consumption.

We’ve decommissioned redundant or underused network

infrastructure and upgraded existing infrastructure to boost

capacity with less energy. We’ve used machine learning to make

incremental energy savings, and replaced supporting mechanical

and electrical infrastructure (heating, cooling, and lighting) with

more energy-efficient alternatives.

We’re also moving to fewer, more efficient buildings. And longer-

term, the switch to full fibre will need fewer exchanges and other

network sites – cutting our network’s overall energy consumption.

Climate change, and other macroeconomic factors like war in

Ukraine, expose us to fluctuating energy prices that we must

manage. So our target is for UK (excluding Northern Ireland)

energy demand to be at least 80% hedged a quarter before the

start of the next financial year – and 50% hedged for the following

financial year.

In each financial year, we aim to build our Power Purchase

Agreement (PPA) and virtual Power Purchase Agreement (vPPA)

portfolio and explore five to ten year contract opportunities. We

complement that by monitoring markets and forward purchasing

electricity when the market is right.

The impact of climate-related risks and opportunities

on our financial planning

Our medium term plan considers both capital and operating

expenditure over a rolling five-year timeframe.

The plan includes our investments on renewable electricity,

transforming our buildings estate, making our network more

resilient, energy efficiency and switching to a low carbon fleet.

Thishelps us mitigate the potential impact of the bigger risks

affecting our business and support our Manifesto goals. We also

include projected revenue from carbon abatement solutions in

ourmedium term plan.

How we manage

climaterisks

A structured and consistent approach

toriskmanagement

We identify, assess, manage, and monitor climate-related risks

through our risk management framework.

We consider three types of risk:

1. Enduring – risks that won’t change much over time.

2. Point – dynamic risks which change quickly over time.

3. Emerging – uncertainties that might emerge over longer

timeframes.

We could face climate-related risks in all these risk types, which

we track and report to the Audit & Risk Committee and Executive

Committee.

You can read more about all of our overall GRCs on pages 63 to 70.

Identifying and assessing risks

We’ve identified climate-related risks in several GRCs.

They include operational resilience (like more flooding, more

intense, longer and more frequent heatwaves), stakeholder

management (like changing consumer preferences, and how they

see us), supply management (like supply chain disruption from

physical climate risks) and health, safety & environment. We

identify those risks through bottom-up and top-down discussions

in our units – and across the whole group. This includes existing

and emerging regulatory requirements relating to sustainability,

such as upcoming reporting requirements from the EU’s

Corporate Sustainability Reporting Directive (CSRD).

We judge point risks based on their potential impact and how likely

they are to happen in the next three years. We judge emerging

risks based on their potential impact, the timeframe over which

arisk could manifest (which could be beyond the three-year

horizon of point risks) and our level of preparedness.

We calculate the impact for both risk types with quantitative and

qualitative measures around financial impact, customer

experience and stakeholder perception. This helps us decide the

relative weight we give each risk.

Managing and reporting on risks

Once we’ve identified and assessed risks we give them an owner,

depending on their priority. These owners decide the things we

need to do to respond – like assigning controls, contingencies and

monitoring activities.

Owners also regularly improve their action plans by checking

metrics and other monitoring activities. This helps them

understand future changes that might be needed – like taking new

actions, escalating issues or updating assessment processes.

For emerging climate risks that are more uncertain and apply

across several parts of the business, we have an established

climate change emerging risk hub. It brings together people

fromacross the group in a forum to discuss developments and

agree actions.

BT Group plc Annual Report 2024

78 Strategic report

Task Force on Climate – related Financial Disclosures continued

Our climate metrics

andtargets

Measuring and monitoring climate risks and

opportunities

In line with our risk management processes and strategic

objectives, we track a number of metrics to measure and manage

our climate-related risks and opportunities set out in Table 5

below. We will continue to review our metrics and targets in line

with potential regulatory changes and guidance from the

International Sustainability Standards Board (ISSB).

We have a sustainability underpin for awards made under our

Restricted Share Plan for Executive Directors. This means that we

must have made sufficient progress towards our sustainability

commitments for awards to be made. This could include progress

on carbon emissions, carbon avoidance and circularity goals. You

can read more about the sustainability underpin on page 109.

Table 5: Climate-related risk and opportunity metrics, targets, and performance

Risk/ Opportunity name Metric Target FY24 performance

More flooding

Network disruption (weighted

for weather events) (%)

Network downtime limited to

0.01%

< 0.01%

More intense, longer and more

frequent heatwaves

More intense, longer and more

frequent extreme weather

events

Supply chain disruption from

physical climate risks

We assessed physical climate risks to our supply chain for the first time in depth this year. We’ll keep

refining the assessment and develop metrics we could use to monitor this risk over time.

Changing customer

expectations and how they

seeus

Scope 1, 2 and 3 emissions

(tCO

By FY31, to be a net zero carbon

emissions business (Scopes 1

and 2 market-based)

By FY31, to reduce our supply

chain carbon emissions by 42%,

compared to FY17 levels (Scope

3 categories 1 - 8)

By FY41, to be net zero for our

supply chain and customer

carbon emissions (Scope 3)

164,743 (-59% vs FY17)

Carbon pricing and taxation

2,425,820 (-25% vs FY17)

Cost of capital

3,000,873 (-26% vs FY17)

ESG index performance: CDP,

EcoVadis, MSCI, Sustainalytics,

Vigeo Eiris

Maintain our top quartile (Q1)

place

Carbon abatement solutions

Cumulative emissions avoided

by customers (tCO

By FY30 help customers avoid

60m tonnes of CO

e by using

our products and services

1.5m (3.8m since FY21)

Energy pricing and energy

efficiency

Networks’ energy consumption

(GWh)

Reduce our net networks’

energy consumption annually

1,680 (-5.1% vs FY23)

% hedged energy costs

Have energy demand at least

80% hedged one quarter before

the start of the next financial

year, and 50% hedged for the

following financial year

85% hedged one quarter before

FY25

55% hedged for FY26

% UK electricity consumption

covered by PPAs

N/A 24%

BT Group plc Annual Report 2024

79 Strategic report

a This metric describes overall service disruption to our UK network, weighted for our technology platforms most impacted by weather.

b Refers to our UK on site electricity consumption, which excludes consumption from MBNL and tenants.

Our worldwide energy use and greenhouse gas emissions

In the table below, we provide an overview of Scope 1, 2 and 3 greenhouse gas emissions and our performance against our emissions

reduction targets. We report in line with the Greenhouse Gas Protocol (ghgprotocol.org).

FY22

FY23

FY24

UK Non-UK UK Non-UK UK Non-UK

Energy

GWh

Tonnes

Energy

GWh

Tonnes

Energy

GWh

Tonnes

Energy

GWh

Tonnes

Energy

GWh

Tonnes

Energy

GWh

Tonnes

Scope 1

(direct emissions)

Gas and oil – heating 170 31,595 2 301 141 26,259 1 270 123 23,024 2 288

Gas and oil – generators

30 6,842 – 30 32 7,264 – 7 16 3,598 – 7

Fugitive emissions –

refrigerants

3,087 1,501 522 268 456 1,110

Commercial fleet (converted

from litres fuel)

557 130,971 3 575 588 141,884 – 673 543 129,779 – 621

Commercial travel (converted

from mileage/cost/litres fuel)

13 3,151 5 1,300 15 4,018 11 2,720 9 2,555 14 3,300

Total Scope 1 770 175,646 10 3,707 776 179,947 12 3,938 691 159,412 16 5,326

Scope 2

(electricity including

nuclear & CHP

)

Total consumption (LBM

) 2,311 490,712 208 63,599 2,283 441,713 198 56,121 2,225 460,654 198 60,770

MBM

renewable

consumption CO

adjustments

General consumption 2,309 (490,371) 208 (63,397) 2,280 (440,976) 198 (56,043) 2,216 (458,915) 198 (60,765)

Commercial fleet EV

consumption

2 (298) – – 3 (634) – – 8 (1,645) – –

Company car EV consumption – (43) – – 0.4 (103) – (20) 1 (94) – –

Total Scope 2 CO

e MBM

adjusted

– 202 – 58 – 5

Total Scopes 1 & 2 (MBM) 3,081 175,646 218 3,909 3,059 179,947 210 3,996 2,916 159,412 214 5,331

Worldwide Scopes 1 & 2 CO

(MBM)

179,555 183,943 164,743

% change from baseline year

FY17 (baseline 404,780)

(56)% (55)% (59)%

Scope 3

: Worldwide

emissions CO

e tonnes

3,243,361 3,133,579 3,000,873

Key climate targets:

Intensity metric Scope 1 & 2

worldwide emissions tonnes

e per £m value added

(baseline 31.50)

14.19 14.04 12.44

Target

31March2031

% change from baseline year

FY17

(55)% (55)% (61)% (87)%

SBTI supply chain emissions

GHG Scope 3 Upstream +

Operational (GHG Catg 1-8)

kt (baseline 3,217 kt)

2,634 2,500 2,425

Target

31March2031

% change from baseline year

FY17

(18)% (22)% (25)% (42)%

N/A: Not available or not applicable

a Data presented has been reviewed to a high level of assurance by LRQA Group Limited against Accountability’s AA1000AS v3 assurance standard. We restate historical years’ data

to replace estimates with actual figures and/or when we think subsequent information is materially significant as determined during audit (typically variances greater than one

percentage point at category level).

b Scope 1: direct emissions from our own operations (e.g. fleet/heating fuel combustion).

c Scope 2: indirect emissions from the generation of our consumed energy (mainly electricity) (excludes third-party consumption).

d Scope 3: including supply chain, customer use of our products and other indirect emissions (like employee commuting).

e For gas and oil based on GWh equivalent input value before combustion and gross calorific value.

f CO

e: carbon dioxide equivalent emissions.

g CHP: combined heat and power.

h LBM: location-based method for Scope 2 emissions accounting – as defined in the Scope 2 Guidance amendment to the Corporate Standard (ghgprotocol.org).

i MBM: market-based method for Scope 2 emissions accounting – as defined in the Scope 2 Guidance amendment to the Corporate Standard (ghgprotocol.org).

j EV: electric vehicle.

You’ll find more information and data in our Manifesto section on pages 37 to 39 and the ESG Addendum (bt.com/esgaddendum).

BT Group plc Annual Report 2024

80 Strategic report

Task Force on Climate – related Financial Disclosures continued

In accordance with provision 31 of the UK Corporate Governance Code 2018, the Directors have assessed the prospects and viability of

the group.

The assessment has been based on the Company’s strategy, balance sheet and financing position, including our £2.1bn undrawn

committed borrowing facility which matures in March 2027, and the potential impact of ‘Our principal risks and uncertainties’

(pages 63 to 70).

The Board has chosen to conduct its review for a period of five years to 31 March 2029. The Board believe that this is an appropriate

timeframe as it aligns with the primary focus of our business and financial planning.

The assessment of viability is based on our medium term plan which forecasts the group’s profitability, cash flows and funding

requirements, and is approved by the Board at the end of each year. The medium term plan is built from bottom-up business plans and

financial forecasts of each of our Customer Facing Units (CFUs) and our Corporate Units (CUs) based on some central macroeconomic

assumptions such as inflation and exchange rates. This is then supplemented by items managed at a group level. The macroeconomic

assumptions are informed by independent third party forecasts. The performance of the group, our CFUs and our CUs against these

forecasts is monitored monthly and this is supplemented each quarter through a series of quarterly business reviews of each unit

conducted by the Chief Executive and Chief Financial Officer.

Beyond our medium term planning horizon, the group also makes investments that have business cases covering a longer time period,

such as our network investments. Significant capital expenditure investment cases are approved by the Chief Executive and, where

appropriate, the Board, after taking into account longer-term risks and opportunities such as the economy, technology and regulation.

Approach

Our medium term plan has been stress tested in a series of individual severe but plausible downside scenarios, each aligned to our group

risk categories as set out on pages 63 to 70. This was followed by stress testing our forecasts against a combined scenario of correlated

risks using a stochastic model. Finally, we then identified several mitigations that could realistically be taken by the business to avoid or

reduce the impact of the underlying risk.

Scenarios included in our combined severe but plausible stress test

Our hypothetical combined downside scenario is based on hostilities in the Middle East escalating into a wider conflict. US and other

Western allies’ involvement in the conflict increases and geopolitical relations between the West and Russia and China worsen. China

increases military activities and blockades trading routes with Taiwan at the start of the five-year viability period. The combined effects

on energy security and supply chain disruption lead to higher inflation, slower growth and recession which intensify cost-of-living

pressures as well as increasing cyber and sanctions compliance risks. Increasing fixed infrastructure wholesale competition from

alternative FTTP network providers materially impacts market share. Meanwhile, a hyperscaler makes direct moves into our markets.

These impacts lead to additional pension payments being required. We fail to defend successfully the high value litigation claims brought

against the group.

The individual scenarios selected for inclusion in the combined scenario were chosen based on some partial correlations and the current

headwinds facing the group and the industry.

Scenario Risk Category Assumptions

Winter power

shortages

Operational

resilience

A crisis in the energy sector leads to insufficient gas supply and energy volatility

Assumptions:

– 35% of Britain to experience daily outages for up to 60 days

– Telecommunications companies not prioritised for service

Supply chain

disruption

Supply management Supply chains are disrupted due to blockage of trading routes

Assumptions:

– Chinese blockades of trading routes with Taiwan slows but does not stop supply chain

– Hostilities in Middle East have limited impact outside of global shipping impacts

International trade

sanctions and

export controls

Legal compliance Discovery of breaches of sanctions or export controls imposed by UK, US or EU nations

Assumptions:

– Trigger for the scenario occurs in the first year

– Widespread problem in two or more units leading to unintentional but significant

breaches

Recession Financing and

Communications

Regulations

The UK market experiences a significant recession with negative GDP growth. This

increases unemployment rates and reduces household spend

Assumptions:

– Loss of proportion of managed contract new business which is not recovered over the

medium term plan period

– Reduction of Consumer mobile device base

BT Group plc Annual Report 2024

81 Strategic report

Viability statement

Scenario Risk Category Assumptions

Cyber security

breach with

customer data loss

Cyber security BT falls victim to cyber attacks, experiencing a major loss of customer data which leads to

a successful class action against BT

Assumptions:

– GDPR breach detected and announced followed by increased customer churn and

EBITDA decline

– Fine from the Information Commissioner’s Office

– Class action claim from customers against the group

Competitive

pressures from

alternative FTTP

network providers

continue to

intensify

Strategy, technology

and competition

Increased fixed infrastructure wholesale competition from alternative FTTP network

providers

Assumptions:

– Alternative FTTP network providers make significant gains in market share even when

overbuilt by Openreach at a later date

– Loss of volumes and materially lower retail market share

A hyperscaler

makes direct move

into our markets

Strategy, technology

and competition

Hyperscaler competitor directly enters consumer market

Assumptions:

– Official announcement in late FY25 producing immediate impact from FY26 onwards

– Consumer losses enable some savings over time

– All existing operators experience same level of churn

Pensions deficit Financing An increase to BT’s funding obligations to the BT Pension Scheme (BTPS)

Assumptions:

– A decline in macroeconomic outlook and financial markets increases the BTPS deficit

– The deficit is met through higher deficit payments over the term of the existing recovery

plan

Litigation losses Legal compliance We fail to successfully defend the high value claims brought against the group

Assumptions:

– Based on publicised claim values claimed with severe outcomes

We have considered directly relevant mitigations that we would employ if these events occurred and included those impacts in our

calculations.

As a summation of the full impact of each of the individual scenarios in this stress test would be an extremely unlikely outcome we used a

stochastic model to develop a more realistic severe but plausible combined scenario. We applied an 80th percentile confidence interval

which allows for a stress test of the medium term plan with a plausible but still severe combination of events, without assuming the worst

impact happens across all scenarios at the same time. The output of the 80th percentile confidence interval is around 40% of the total

sum of these individual risks.

Results

Applying our severe but plausible combined scenario with related mitigations indicates that BT would experience a liquidity shortage

commencing in the second year. However, there are further mitigations, including planned debt issuance, that could be applied to

eliminate this liquidity shortage. We would need to adopt around a third of the mitigations we have identified to maintain positive cash

flow over the full five-year period of the assessment.

The mitigations directly in our control primarily revolve around reducing operating and capital expenditure cash outflow from the group.

In addition, there are also several mitigations which are outside of our control like raising debt. The Board believe that it is reasonable to

expect that it could continue to access debt capital markets to refinance a portion of our outstanding debt as it falls due, or to renew our

undrawn committed facility (which expires in March 2027, before the end of the viability period). If access to debt markets wasn’t

available, then equity capital markets would be considered as an alternative to raise funds.

Based on the results of this analysis, the directors have a reasonable expectation that the group will be able to

continue in operation and meet its liabilities as they fall due over the five-year period of their assessment.

The directors also considered it appropriate to adopt the going concern basis of accounting when preparing the financial statements, as

set out in the ‘Report of directors’ on page 126.

BT Group plc Annual Report 2024

82 Strategic report

Viability statement continued

We’re committed to delivering on our bold

ambition to be the world’s most trusted

connector of people, devices and machines. We’re

focused on growing sustainable value for all our

stakeholders and the communities we operate in,

through effective Board leadership, strong

corporate governance and a clear understanding

of the broader telecommunications market.

Compliance with the 2018 UK

CorporateGovernanceCode (the Code)

In respect of the year ended 31 March 2024, BT Group plc was

subject to the Code published by the Financial Reporting

Council (FRC) in July 2018 (available at frc.org.uk). The

Board confirms that BT Group has applied all the principles

and complied with or explained all the provisions of the

Code throughout the year as seen below. BT Group is aware of

the updated Code, published by the FRC in January 2024,

which will apply to financial years beginning on or after

1January 2025.

1. Board leadership and company purpose

A: Leadership, long-term sustainable success, generating value

forshareholdersand contributing to wider society 19-29, 34-39, 72-80, 105

B: Purpose, values, strategy and culture 84, 88- 93, 98, 102, 105

C: Resources and prudent and effective controls 48-49, 61-62, 89, 93, 102, 105

D: Effective engagement with stakeholders 40-45, 90-91, 105

E: Workforce policies and practices 24, 30-34, 46-47, 88, 90-91, 102, 122

2. Division of responsibilities

F: Leadership of the Chairman* 84, 87, 88

G: Board composition and clear division of responsibilities 8-9, 85-88, 94

H: Role and time commitment of Non-Executive Directors 86-88, 97, 121

I: Policies, processes, information, time and resources,

andsupportoftheCompany Secretary 85, 87-88, 97-98

3. Composition, succession and evaluation

J: Board appointment process and effective succession planning 85-98

K: Board and Committee skills, experience and knowledge 86-87, 96-98

L: Annual Board and individual director evaluation 94, 98

4. Audit, risk and internal control

Independence and effectiveness of internal

and external audit functions 99-103

N: Fair, balanced and understandable assessment of

company’spositionandprospects 89, 100, 125

O: Procedures to manage risk, oversee internal control framework

anddetermine the nature and extent of principal risks 61-62, 99-103, 127

5. Remuneration

P: Remuneration policies and practices 110

Q: Procedure for developing policy on executive, director and senior

management remuneration 106-124

R: Independent judgement and discretion

in remuneration outcomes 108, 111, 114

Contents

Chairman’s governance letter 84

Our governance framework 85

Board leadership and company purpose

– Board of directors and division of responsibilities 86

– Role of the Board 88

– Board focus in FY24 89

– Board engagement with colleagues 90

Section 172 statement 92

Board composition, succession and evaluation

– FY24 Board and Committee evaluation 94

– Board induction 95

– Nominations Committee Chair’s report 96

Audit, risk and internal control

– Audit & Risk Committee Chair’s report 99

BT Compliance Committee Chair’s report 104

Responsible Business Committee Chair’s report 105

Report on directors’ remuneration

– Remuneration Committee Chair’s letter 106

– Focus on remuneration 110

– Annual remuneration report 113

– Remuneration in context 122

Statement of directors’ responsibilities 125

Report of the directors 126

*Further details on the responsibilities of the Board can be

found on our website bt.com/governance

BT Group plc Annual Report 2024

83 Corporate governance report

Corporate

governancereport

The Board remains focused on ensuring it governs the

group effectively, making careful decisions to generate

long-term value for our stakeholders. We are cognisant of

the new Code and are well placed to ensure our governance

practices across the group are strengthened in line with

this and evolving best practice.

The Board prioritises effective corporate governance across the

group. Promoting fairness, openness and transparency in its

responsibilities to stakeholders and generating long-term, sustainable

success has been, and will remain, the Board’s primary objective.

The Board has been educated on the key changes coming out of

the new Code, published in January 2024. We’re well placed to

build on our corporate governance practices to comply with the

Code in future years, and to ensure the Board is carrying out its

role in governing the group effectively. In next year’s report we’ll

provide an update on how the priorities of the Board and

committees have been shaped by the new Code in FY25.

This Corporate governance report sets out the approach our

Board takes to facilitate effective governance and how it supports

our strategy and the decisions we have made, ensuring it considers

the interests of our stakeholders and our contribution to society.

Board and committee changes

– Philip Jansen stepped down from the Board and as Chief

Executive at the end of January. I’d like to take this time to thank

Philip for the excellent job he has done during his time at

BTGroup and in leading our transformation.

– We welcomed Allison Kirkby to the role of Chief Executive in

February, having served on the Board since 2019. We’re

delighted to have Allison lead the group and I look forward to

supporting her as we drive our long-term strategy (see page 96

for details on Allison’s appointment).

– As mentioned in last year’s report, Ian Cheshire and Iain Conn

stepped down from the Board at the conclusion of the 2023

AGM. Adel Al-Saleh also stepped down in December 2023 and

Isabel Hudson will step down at the conclusion of the 2024 AGM

in July after serving nine years on the Board. On behalf of the

Board, I would like to thank them all for their valuable

contributions to the Board and to the group over the years and

wish them well in their future endeavours.

– Ruth Cairnie joined the Board in April 2023 and, from the

conclusion of the 2023 AGM, succeeded Iain as the Senior

Independent Director and Ian as Chair of the Remuneration

Committee.

– Raphael Kübler was appointed to the Board in January 2024

having been put forward by Deutsche Telekom as their

nominated director.

– We appointed Tushar Morzaria to the Board as an Independent

Non-Executive Director with effect from 7 May 2024. Tushar

brings a wealth of strategic financial management experience

gained over 25 years where he has overseen transformation

programmes and has strengthened risk and control frameworks.

With these Board changes, we have focused on complementing

the existing skills on the Board, and ensuring the best mix of

diversity of viewpoints, skills and experience. More details on

succession planning and the work of the Nominations Committee

during the year can be found on pages 96 to 98.

During the year, the Board has also made some changes to

simplify our Board and Committee structure. After careful

consideration, it was decided that it was the appropriate time to

disband the BT Compliance Committee and to transition its

responsibilities across the Audit & Risk and Responsible Business

Committees. More detail on this can be found on pages 99 and 105.

Supporting our colleagues

This has continued to be a challenging year for our colleagues; the

Board recognised this and held many colleague-focused

discussions during the year.

After much deliberation, the Board decided to make changes to our

colleague engagement mechanism and establish a comprehensive

colleague outreach programme led by the Designated Non-Executive

Director for Workforce Engagement. As part of this change, the

Colleague Board was disbanded during the year. Maggie Chan Jones

was appointed as our new Designated Non-Executive Director for

Workforce Engagement, succeeding Isabel, who will step down from

the Board at the conclusion of the 2024 AGM. Maggie’s previous

experience, focus on coaching, and her championship of diversity,

inclusivity and other colleague matters will help ensure that the voices

of our colleagues continue to be heard in the boardroom. I’d like to

thank Isabel for all of her support and guidance to the Colleague

Board and our colleagues, over the past four years. Further detail on

how the Board made this decision and how it engages with our

colleagues can be found on pages 90 to 91.

Inclusion, equity and diversity

We are committed to encouraging inclusive thinking inside and

outside of our business. This year, we have made progress in ethnic

minority representation, with decent gains against the bold targets

set out in our Manifesto. For more information on our continued

progress in this area, see pages 31 to 32 and 34 to 39.

The Board’s diversity targets are set out in our Board Diversity and

Inclusion Policy. As at 31 March 2024, our Board comprised 50%

female directors, two directors from an ethnic minority

background, and one who has a disability. Ruth Cairnie’s

appointment during the year as the Senior Independent Director

ensured that we met the requirements of the Listing Rules to have

female representation in at least one of the four senior board

positions. This position was reinforced by Allison’s appointment as

Chief Executive from 1 February 2024, meaning that half of the

four senior board positions are now held by women. From the 2024

AGM, our Board will comprise 40% female directors, three directors

from an ethnic minority background, and one who has a disability.

Leading this Board and our business continues to be a privilege.

Iwould like to thank all our BT Group teams for their continued

efforts to help us deliver on our purpose and I am excited to work

with a fantastic group of fellow directors over the next year.

Adam Crozier

Chairman

15 May 2024

BT Group plc Annual Report 2024

84 Corporate governance report

Chairman’s

governance letter

The Board

Responsible for the stewardship of the group, overseeing its conduct and affairs to deliver on our strategic objectives and

creating long-term success to generate sustainable value for our shareholders and the interests of other stakeholders. The

Board has established certain Committees to assist it in discharging its responsibilities and delegates day-to-day

responsibilities to the Chief Executive.

Board leadership and company purpose on pages 88 to 91

Audit & Risk Committee

Oversees, assesses and reviews our financial

and narrative reporting, internal controls

andrisk management. It also oversees

BTGroup’s compliance with the

Commitments we made as part of the 2017

Digital Communications Review (DCR) with

Ofcom and the Governance Protocol.

Nominations Committee

Considers the structure, size and composition

ofthe Board and its Committees and advises

onsuccession planning for the Board and the

Executive Committee. It ensures the Board is

diverse, with the appropriate balance of skills,

experience, independence and knowledge.

Audit & Risk Committee Chair’s report on

pages 99 to 103

Nominations Committee Chair’s report

onpages 96 to 98

Remuneration Committee

Agrees the remuneration framework for the

Chairman, Executive Directors and certain

senior executives and monitors remuneration

practices and policies for the wider workforce.

Responsible Business Committee

Agrees the responsible business strategy,

including its implementation through our

Manifesto goals and targets, and monitors

adherence to consumer fairness principles.

Remuneration Committee Chair’s letter

and Report on directors’ remuneration on

pages 106 to 124

Responsible Business Committee Chair’s

report on page105

On 6 April 2023, the Committee’s name changed from

the Digital Impact & Sustainability Committee tothe

Responsible Business Committee.

National Security and Investigatory Powers Committee

Oversees our role in the use of official investigatory powers.

Chief Executive

Responsible for running the business and setting and executing the group strategy.

BT Investment Sub-Committee

Provides input and recommendations

that support the Chief Executive’s

decision making on investment cases

and budgets.

Executive Committee

Assists the Chief Executive to develop

and execute the group strategy and

budget, and monitors overall

performance and how we’re

managing risks.

Disclosure Sub-Committee

Ensures BT Group meets its disclosure

obligations and reviews and approves

regulatory and other announcements

before publication.

Matters reserved to the Board and its Committees’ terms of reference can be found on our website at bt.com/governance

Each Committee Chair formally reports to the Board following their meetings and makes any recommendation to the Board in line with that Committee’s terms of

reference. Papers and minutes are circulated to all Board and Committee members as appropriate, other than to those with a potential conflict of interest. Deutsche

Telekom’s nominated director owes a fiduciary duty to both BT Group and Deutsche Telekom. The Conflicted Matters Committee reviews all papers ahead of sharing

thesewith him to identify potential or actual conflicts of interest.

BT Group plc Annual Report 2024 85 Corporate governance report

Our governance

framework

Adam Crozier

Chairman

Appointed Chairman December 2021 and to the

Board and as Chairman designate November 2021.

Experience

Adam was previously Chairman of ASOS, Stage

Entertainment BV and Vue International Cinema

Group, and a Non-Executive Director of Sony

Corporation. He has over 20 years’ experience as a

CEO across four different industries, most recently as

the CEO of ITV from 2010 to 2017. Prior to ITV,

Adam was CEO of Royal Mail from 2003 to 2010.

Before that he was CEO of the Football Association

from 2000 to 2002 and Joint CEO of Saatchi &

Saatchi from 1995 to 2000.

Relevant skills and contribution tothe Board

Significant experience in leading public company

boards, developing teams and managing stakeholders

and brings a strong transformational and operational

track record in large-scale executive roles. He has also

built a strong track record in turning around troubled

organisations and in building and leading successful

management teams.

External appointments

Chairman of Whitbread and Kantar Group.

Allison Kirkby

Chief Executive

Appointed Chief Executive February 2024 and to the

Board March 2019.

Experience

From May 2020 until being appointed Chief Executive

of BT Group, Allison was President & CEO of Telia

Company. Allison was previously President & Group

CEO of TDC Group until October 2019, and President

& Group CEO of Tele2 AB from 2015 to 2018, having

been Tele2 AB’s Group CFO from 2014. She was chair

of the Audit Committee and a Non-Executive Director

of Greggs until May 2019. She has also held financial

and operational roles within 21st Century Fox, Virgin

Media, Procter & Gamble and Guinness.

Relevant skills and contribution tothe Board

Valuable and recent experience in the international

telecoms and media sector, combined with significant

experience in transformation, driving performance,

improving customer service and delivering shareholder

value.

External appointments

Non-Executive Director and member of Audit

Committee of Brookfield Asset Management

Limited.

Simon Lowth

Chief Financial Officer

Appointed Chief Financial Officer and to the Board

July 2016.

Experience

Simon was CFO of BG Group before its takeover by

Royal Dutch Shell in February 2016. Before that, he

was CFO of AstraZeneca from 2007 to 2013. He was

an Executive Director of ScottishPower from 2003 to

2007, having been appointed as the Finance Director

in 2005. Before 2003, Simon was a director of

McKinsey & Company.

Relevant skills and contribution totheBoard

A strong background in finance, accounting, risk,

corporate strategy and mergers and acquisitions.

Simon has experience and a track record of

implementing cost transformation and performance

improvement programmes.

External appointments

Non-Executive Director and member of the Audit

and Nomination & Governance Committees of Smith

& Nephew.

Isabel Hudson

Independent Non-Executive Director

Appointed to the Board November 2014.

Experience

Isabel was previously Non-Executive Chair of the

National House Building Council until May 2020. She was

also previously Senior Independent Director of RSA

Insurance, Non-Executive Director of The Pensions

Regulator, MGM Advantage, QBE Insurance, Standard

Life and an Executive Director of Prudential Assurance

Company in the UK.

Relevant skills and contribution totheBoard

A wealth of experience in financial services, in the life,

non-life and pensions industries as well as risk, control,

governance and international business. Insight and

expertise in regulatory, pensions and financial matters.

External appointments

Non-Executive Director and Chair of the Audit

Committee of Axa S.A. and Non-Executive Director of

ISC Group, a not-for-profit organisation supporting

women to bridge the gender seniority gap in insurance.

Isabel is also an ambassador for the disability charity,

SCOPE.

Matthew Key

Independent Non-Executive Director

Appointed to the Board October 2018.

Experience

Matthew held various positions at Telefónica from

2007 to 2014 including as Chairman and CEO of

Telefónica Europe and Chairman and CEO of

Telefónica Digital. From 2002 to 2004 he was the

CFO, Strategy and Regulation Director of O2 UK

before becoming CEO in 2004. Matthew previously

served as Finance Director at Vodafone UK and

Chairman of Tesco Mobile. He has previously held

positions at companies including Kingfisher, Coca-

Cola and Schweppes Beverages, Grand Metropolitan

and Dallaglio RugbyWorks. He was also a Non-

Executive Director and Chair of the Audit Committee

of Burberry from 2013 to 2023.

Relevant skills and contribution tothe Board

Strong strategic skills and a wealth of experience in

finance and the telecoms sector. Matthew is also a

Director of the joint venture between BT Group and

Warner Bros. Discovery.

External appointments

None.

Raphael Kübler

Non-Independent, Non-Executive Director

Appointed to the Board January 2024.

Experience

Raphael is the Chief Operating Officer of Deutsche

Telekom AG. Prior to this he held the position of

Senior Vice President Controlling at Deutsche

Telekom AG and Chief Finance Officer of T-Mobile

Deutschland GmbH. Raphael has also been a

director of T-Mobile USA, Inc., since April 2013 and

served on other boards of listed companies,

including Ströer SE & Co. KGaA, Hellenic

Telecommunications Organisation and SES Global

S.A.

Relevant skills and contribution tothe Board

Extensive experience in the telecommunications

industry, including strategic transformation projects

and mergers and acquisitions.

External appointments

Director of T-Mobile USA, Inc.

BT Group plc Annual Report 2024

86 Corporate governance report

Board of directors

and division of

responsibilities

Membership key Audit & Risk Committee

Committee Chair

Executive Committee

National Security and Investigatory Powers Committee

Nominations Committee

Remuneration Committee

Responsible Business Committee

Ruth Cairnie

Senior Independent Non-Executive Director

Appointed to the Board April 2023.

Experience

Ruth has a wealth of experience gained from a 37-

year international career at Royal Dutch Shell

holding senior functional and line roles, including

having responsibility for group strategy and

planning. She was a Non-Executive Director of

Associated British Foods from 2014 to 2023 and

Senior Independent Director and Remuneration

Committee Chair from 2018. She was a Non-

Executive Director of Rolls-Royce from 2014 to

2019 and Remuneration Committee Chair from

2016, a Non-Executive Director of ContourGlobal

from 2018 to 2019 and Non-Executive Director and

Remuneration Committee Chair at Keller Group

from 2010 to 2017.

Relevant skills and contribution tothe Board

Ruth has extensive experience gained from a broad

range of executive and non-executive roles at

leading industrial companies, both in the UK and

internationally. She also has experience advising

government departments on strategic development

and capability building.

External appointments

Chair of Babcock International Group and a trustee

of Windsor Leadership and the White Ensign

Association.

Maggie Chan Jones

Independent Non-Executive Director and Designated

Non-Executive Director for Workforce Engagement

Appointed to the Board March 2023.

Experience

Maggie was the founder and served as the Chief

Executive of Tenshey for seven years until February

2024. Maggie originated Tenshey’s mission to

elevate more women and underrepresented talent

into leadership roles and the boardroom. This builds

on a highly successful career in marketing at several

of the world’s largest technology companies,

including Microsoft and SAP.

Relevant skills and contribution tothe Board

Deep international marketing and brand experience.

Maggie is a recognised executive in business

transformation, ESG and as an industry thought-

leader in the marketing and technology sector.

External appointments

Non-Executive Director of Sage Group and the

United States Tennis Association (non-profit). She

isalso a Non-Executive advisor to Ontinue AG.

Steven Guggenheimer

Independent Non-Executive Director

Appointed to the Board October 2022.

Experience

Steven has more than 25 years of experience at

Microsoft, where he held a variety of senior and

large-scale leadership roles between 1993 and

2020. For the last 12 years he held the position of

Corporate Vice President leading the OEM,

Developer/ISV, and AI Solutions organisations. Prior

to joining Microsoft, Steven worked at Spectra-

Physics Lasers.

Relevant skills and contribution tothe Board

Accomplished technology executive with a strong

track record of advising businesses on digital

transformation and extensive insight into

technologies ranging from AI to cloud computing.

External appointments

Non-Executive Director of HSBC Holdings, Forrit

and Leupold & Stevens. He is also an advisor to

Tensility Venture Partners and Aries Software

Holdings.

Sara Weller

Independent Non-Executive Director

Appointed to the Board July 2020.

Experience

Sara’s previous roles include Managing Director of Argos

and various senior positions at J Sainsbury, including

Deputy Managing Director and serving on its board

between 2002 and 2004. Sara was a Non-Executive

Director of Lloyds Banking Group until May 2021 and

United Utilities Group until July 2020. She was also

the lead Non-Executive Director at the Department

for Work and Pensions until April 2020, Lead Non

Executive at the Department of Communities and Local

Government 2010 to 2015, Non-Executive Director of

Mitchells & Butlers and held senior management roles

at Abbey National and Mars Confectionery.

Relevant skills and contribution tothe Board

A broad perspective coming from a background in

retail, fast moving consumer goods and financial

services, as well as strong executive and non-

executive board experience in regulated sector plcs

and central Government organisations.

External appointments

Chair of The Money and Pensions Service and Non-

Executive Director of Virgin Money UK and Clydesdale

Bank (a subsidiary of the Virgin Money Group).

Tushar Morzaria

Independent Non-Executive Director

Appointed to the Board May 2024.

Tushar joined the Board on 7 May 2024 as an

Independent Non-Executive Director. Tushar is a

member of the Audit & Risk, Nominations and

Remuneration Committees.

Sabine Chalmers

General Counsel, Company Secretary & Director

Regulatory Affairs

Sabine joined BT Group in April 2018as General

Counsel and was appointed as Company

Secretary inSeptember 2021.

See page 9 for Sabine’s full biography.

Board changes

In line with our recent announcement,

Isabel Hudson will not put herself forward

for re-election at the 2024 AGM and will

cease as an Independent Non-Executive

Director on the Board at the conclusion

ofthe 2024 AGM.

BT Group plc Annual Report 2024

87 Corporate governance report

Our directors share collective responsibility for the

activities of the Board. There is a clear division of

responsibilities between the Chairman and the

ChiefExecutive as required under the Code. The

responsibilities ofthe Chairman, Chief Executive,

Chief Financial Officer and Senior Independent Director

and other key roles within BT Group, along with the matters

reserved to the Board, are set out on our website at

bt.com/governance

Role of the Board

The Board is responsible for establishing the group’s purpose,

values, strategy and culture, and for setting the tone from the top.

Further details on our purpose, ambition, values and strategy on

pages 18 to 29.

The Board monitors the indicators of our culture through:

– discussions with the Chief Executive

– reports from the Chief Human Resources Officer, which include

progress on simplifying organisational effectiveness and

embedding a performance culture that rewards outcomes

– reports to the Audit & Risk Committee on any concerns raised

through our Speak Up whistleblowing service, see page 102

– themes and insights from our Your Say colleague engagement

surveys

– all-employee “Join Allison” live Q&A sessions

– direct feedback and insights from colleagues via our Designated

Non-Executive Director for Workforce Engagement.

We believe that these indicators remain effective in providing the

Board with useful insights into colleague sentiment and the wider

culture across the organisation. More information on how the

Board is kept informed of colleague perspectives and our culture

can be found on page 90 to 91 and in the Strategic report on

page41.

The Board maintains oversight of the group’s operations,

performance, governance and compliance with statutory and

regulatory obligations. It determines the group’s risk appetite,

ensures that we have robust systems of risk management and

internal controls in place, and is responsible for ensuring that there

is an effective leadership team in place to efficiently execute the

group’s strategy.

A number of key decisions and matters are reserved to the Board

and are not delegated to any of the Committees, the Chief

Executive or management.

These are set out in the matters reserved to the Board and

are available on our website: bt.com/governance

Board meetings in FY24 were held in person in our head office in

London to ensure constructive levels of engagement and

discussion, to challenge management and encourage robust

debate as part of decision making. Video conference was

availablefor invited attendees who were unable to join the Board

in person. Pre-Board meeting dinners were held for the Board as

part of informal interactions.

Meetings attended

Adam Crozier (Chairman) 8/8

Allison Kirkby

8/8

Philip Jansen

7/8

Simon Lowth 8/8

Adel Al-Saleh

7/7

Ruth Cairnie 8/8

Maggie Chan Jones 8/8

Ian Cheshire

2/2

Iain Conn

2/2

Steven Guggenheimer

7/8

Isabel Hudson

7/8

Matthew Key 8/8

Raphael Kübler

1/1

Sara Weller 8/8

a Allison attended all Board meetings during the year as a Non-Executive Director

b Philip sent his apologies for the last meeting of the year as he stepped down from the

Board and as Chief Executive on 31 January 2024

c Adel stepped down from the Board on 31 December 2023

d Ian and Iain stepped down from the Board at the conclusion of the 2023 AGM

e Steven sent his apologies for the July meeting due to a pre-existing conflict

f Isabel sent her apologies for the September meeting due to a personal matter

g Raphael joined the Board on 30 January 2024

Meetings and attendance

We held eight scheduled Board meetings including one strategy

meeting in FY24. The Chairman also held private sessions with the

Non-Executive Directors during the year. The Company Secretary

is Secretary to the Board, and she, or her delegate, attends all

meetings and provides advice, guidance and support as required.

Each member of the Board, individually and collectively, has

access to the Company Secretary and can obtain independent

professional advice if needed.

Board and Committee members are provided with papers in

advance of each meeting on a secure electronic portal. Directors

are expected to attend Board and relevant Committee meetings

of which they are a member, unless prevented by prior

commitments, illness or a conflict of interest. If a director is unable

to attend a meeting, they usually give their comments to the

Chairman or the Committee Chair in advance so that these

canbeconsidered as part of the discussion at the meeting.

Section 172 statement

and stakeholders

Our Section 172 statement is set out on pages 92 to 93 and

demonstrates our Directors’ regard to the matters in section 172

of the Companies Act 2006 (2006 Act) in performing their duties,

and how they have had regard to colleagues’ interests and the

need to foster business relationships with suppliers, customers and

others, together with a summary including the Board’s principal

decisions.

See pages 90 to 91 for details on the Board’s engagement with

ourcolleagues and the Strategic report on pages 40 to 45 for

additional details of how we engage with our key stakeholders.

BT Group plc Annual Report 2024

88 Corporate governance report

Board leadership and company purpose

Board focus in FY24

Group strategy

During the year, the Board:

Approved strategic initiatives and items of significant

strategic importance in line with the matters reserved

to the Board including:

– maintaining the pace of FTTP build towards the target of 25m

premises by the end of 2026 against the challenging economic

climate

– the sale of BT Tower to MCR London Holdings Limited for

£275m (see pages 93 and 174)

– BT Pension Scheme (BTPS) triennial valuation (see pages 54,

93 and 193)

– simplification activities in relation to the merging of Enterprise

and Global to create Business.

Held a full-day strategy meeting where it considered

with management:

– the group’s strategy and long-term growth opportunities

– the approach for Business going forward

– strategic priorities and how these are built into the group’s

medium-term plan

– progress on key initiatives

– key challenges and risks to delivering our priorities and plans

toaddress or mitigate these

– the macroeconomic environment and how the group should

respond.

Received and discussed the Chief Executive’s report at

each meeting, which focused on:

– the group’s overall performance and operations

– progress against our strategic pillars and priorities

– the competitive and regulatory environment that the group

operates in

– engagement with, and the views of, our stakeholders including

our investors, our colleagues, Ofcom and Government

– key business operations including matters which are important

to the group’s reputation, as well as colleague, customer,

supplier and community considerations.

During the year, the Board also considered, discussed and agreed

not to proceed with certain proposed initiatives which were

determined not to be strategically important or beneficial to

thegroup.

Performance and execution of strategy

During the year, the Board discussed, reviewed and, as

appropriate, approved:

– the financial statements at full and half year and trading

updates at each quarter, including any external guidance. It also

discussed the feedback from investor meetings, including

feedback received after the publication of each set of financial

results. At each meeting, the Board reviewed the current

financial and trading performance for the period against budget

and consensus, and the full year outlook for each unit and the

group as a whole

– the going concern and viability statements and the group’s tax

strategy

– reports, on a monthly basis, outlining share register movement,

our share price performance relative to the market, investor

relations activities and engagement with shareholders

– the medium-term plan, having considered the main

opportunities and challenges, our strategic priorities and KPIs

– the group’s financing strategy, having considered different

options for raising finance and managing cash flow

– the delivery of the group’s transformation programmes against

our objectives to drive efficiencies, opportunities and continued

cost reduction across the group

– customer experience for each CFU including individual brand

and customer segment NPS, in particular the progress against

our related ambitions. As part of this, the Board was updated on

the initiatives and customer insights used to drive improvement

for our customers. Further details on customer experience can

be found on page 26 to 27.

– any regulatory or competition investigations and significant

litigation, including our response and the stakeholder and

reputational impact of these.

Risks, controls and governance

During the year, the Board discussed:

– the group risk management framework twice, with in-depth

discussions on certain group risk categories (GRCs), including

the point and emerging risks and uncertainties facing the group

and our risk appetite for each (see pages 61 to 70). The Board

also received regular updates from the Chair of the Audit & Risk

Committee, which undertakes detailed reviews of the group’s

systems of risk management and internal controls, including the

effectiveness of the controls, mitigation activities and any areas

for improvement (see page 102), as well as GRCs not discussed

by the Board

– the progress of BT Group transformation programmes

– the Annual Report, which was subsequently approved on the

recommendation of the Audit & Risk Committee (see page 100),

that, taken as a whole, it is fair, balanced and understandable

and provides the information necessary for shareholders to

accurately assess the group’s position and performance,

business model and strategy

– the themes and actions agreed as a result of this year’s Board

and Committee evaluation (see page 94).

People and culture

During the year, the Board discussed:

– the succession and appointment of the Chief Executive,

delegating final approval to a sub-committee of the Board.

More information on Allison’s appointment as Chief Executive

can be found in the Nominations Committee Chair’s Report on

page 96

– the progress of integrating Enterprise and Global into Business,

together with the related operating model changes and

colleague impacts, focusing on the right diversity in the

leadership teams (see page 22)

– the progress and delivery against our people and cultural

strategy, ambitions and related goals. Our ambition is to build

aculture where people can be their best and make BT Group a

brilliant place to work

– skills and organisational development; inclusion, equity and

diversity; occupational health and wellbeing, and colleague

engagement.

Each of the Committee Chairs also reported back to the Board on

the areas within their remit that are important indicators of the

group’s culture.

BT Group plc Annual Report 2024

89 Corporate governance report

Board engagement

with colleagues

Colleague Board – FY24 activities

The Colleague Board was in place throughout most of FY24, and

held three formal meetings, an additional meeting with Isabel

Hudson, Maggie Chan Jones and Allison Kirkby, and a number

ofinformal sessions with internal teams during the year.

The Colleague Board’s views were sought on pan-BT Group

programmes, including how these are aligned with our values and

culture, and how we communicate these to our colleagues. The

Colleague Board continued to successfully contribute to, and

shape, some of our key initiatives this year by sharing different

views and perspectives. This helped the Board and senior

leadership to understand the perspectives of our colleagues on a

range of different topics, and supported good decision-making

practices. There was a Q&A session at each meeting which

enabled Colleague Board members to ask questions of the Chief

Executive and Isabel and provided an opportunity for Colleague

Board members to further understand key issues impacting the

group and our colleagues.

As in previous years, the Colleague Board was chaired by the Chief

Executive. Members included Isabel and a number of colleagues

from a diverse range of roles across the group. Sabine Chalmers,

BT Group General Counsel, Company Secretary & Director

Regulatory Affairs, and Athalie Williams, Chief Human Resources

Officer, and two Openreach colleagues were also invited and

attended all formal meetings. Other members of the Executive

Committee attended meetings on a rotating basis and the

Chairman and other Non-Executive Directors were able to attend

meetings as observers. The Director of Internal Communications

was invited to attend Colleague Board meetings and members

were encouraged to feedback on key internal communications.

The Deputy Company Secretary was secretary to the Colleague

Board and he, or his delegate, attended all meetings and provided

support, guidance and advice as required.

The last formal Colleague Board meeting was held in November

2023. A final meeting with members was held with Isabel, Maggie

and Allison in February 2024 to thank Isabel and the Colleague

Board members for their efforts over the years and to discuss the

key topics for both Maggie, as the new Designated Non-Executive

Director for Workforce Engagement, and Allison, as Chief

Executive, to be aware of going forward.

Key topics discussed in FY24

People

framework, pay

and benefits

Colleague feedback on the people

framework, pay and benefits and a deep dive

session was hosted by the Director of Group

Reward.

Inclusion, equity

and diversity

The group’s progress on inclusion, equity

and diversity and the future priorities and

insight was fed back to Isabel for future

consideration during Board meetings.

Hybrid working Colleague sentiment on the hybrid working

principles and how consistently this is

applied across the group.

Colleague

engagement

surveys

The move from annually to quarterly Your

Say colleague engagement surveys. The

Board asked Colleague Board members to

encourage colleagues to complete the

condensed surveys and communicate the

importance of the results.

Business

integration

The integration of Enterprise and Global

forming Business, and the challenges

brought about by this change, including

impacts on colleagues, whilst recognising

the overall benefits to the group.

‘Speak Up

Because We Care’

campaign

Consideration of the campaign, which was a

Colleague Board request to address peer to

peer engagement on internal digital

platforms. The Board recognised that

engagement between colleagues has been

positively impacted by the campaign,

especially on Workplace by Meta (BT

Group’s internal social media platform).

Travel and

expenses

Colleague feedback on the changes made to

the travel and expenses policy. HR and

Finance subsequently carried out a review

and made the appropriate updates to ensure

the policy remains suitable for colleagues.

Colleague Board engagement

With the Board

At each formal Colleague Board meeting, the Board (via Isabel)

and/or management had the opportunity to discuss topics on

which they would like the Colleague Board members’

perspectives. Colleague Board members shared their insights on

‘hot topics’ in order to bring these to the attention of the Board

and/or management. The Colleague Board raised and discussed

avariety of topics, including those in the table above. Isabel

reported back to the Board and its Committees, as appropriate,

onthe discussions, providing the Board with a direct insight into

colleague perspectives to help inform its decision making. During

the year, Isabel updated the Remuneration Committee on

sentiments being raised by our colleagues in relation to the

remuneration of our workforce and related discussions. The

Colleague Board meeting materials and notes of the meetings

were also made available to the Board.

The Chief Executive and Executive Committee members’

attendance, as well as the Designated Non-Executive Director

forWorkforce Engagement, allowed for a mutual exchange of

information, especially in relation to current ‘hot topics’, which was

fed back into the Board and Executive Committee’s discussions

and decision-making process throughout the year. One example

was the feedback the Colleague Board provided on the pay review

during the year which was discussed at both Colleague Board and

Board meetings, ahead of a decision.

Since its inception, the Colleague Board has been used alongside

other colleague engagement mechanisms which will continue to

be utilised and enhanced going forward. See page 41 for more

information on how we engage with colleagues.

With our colleagues

Colleague Board members fed back to colleagues on the

discussions from formal meetings as well as highlighting any other

issues raised between meetings. Members were encouraged to

connect via internal engagement channels including the People

Networks and by reviewing the outputs of the Your Say

engagement surveys to obtain an increased and broader

understanding of colleagues’ views.

Each Colleague Board member was invited to join the senior

leadership team calls hosted by the Chief Executive throughout

the year to give them additional perspectives on the group’s

performance and strategic decisions.

BT Group plc Annual Report 2024

90 Corporate governance report

Board leadership and company purpose continued

The Colleague Board members also delivered a series of Meetx

Teams live sessions (BT Group’s equivalent of TEDx talks) which

aimed to increase the visibility of leadership from across the group,

covering topics including leadership, culture and inclusivity, equity

and diversity.

Changes to our colleague engagement mechanism

The Colleague Board has been the Board’s chosen workforce

engagement mechanism under the Code since 2019. During the

year, as part of a review of our governance structures carried out

by the Chairman, supported by the Company Secretary, the Board

concluded that it was the appropriate time to re-evaluate the

workforce engagement mechanism best suited to the group.

The Board considered the workforce engagement structure and

found that, whilst the Colleague Board has delivered on its aims to

bring the colleague voice into the boardroom, a number of

alternative approaches are available. The Board considered a

number of factors including the overlap of the Colleague Board’s

role with other colleague engagement mechanisms across the

group, especially the change in frequency of the Your Say

engagement surveys from annually to quarterly, and also the

amount of work the Colleague Board members were undertaking

to represent the colleague voice.

After deliberation, the Board concluded that the Colleague Board

should be disbanded and that the Designated Non-Executive

Director for Workforce Engagement should engage in a

comprehensive colleague outreach programme which will utilise

the existing colleague engagement mechanisms across the group.

The Board recognised the key role the Colleague Board has played

in bringing the colleague voice into the boardroom for the last four

years, and are appreciative of the passion and commitment of

Colleague Board members over the years in aiming to make

BTGroup a better workplace for all.

Additionally, as part of this review, and in light of Isabel’s tenure

onthe Board, it was considered an appropriate time to appoint

anew Designated Non-Executive Director for Workforce

Engagement. Maggie was appointed to succeed Isabel and will

bring to the role her personal experience and insight, her focus

oncoaching, and her championship of diversity, inclusivity and

other colleague matters.

After another challenging year for our

colleagues, I would like to thank the Colleague

Board members for their continued contributions

and valuable insight into colleague sentiment,

which I have shared with the Board throughout

the year. The thought-provoking questions and

constructive challenges have greatly benefitted

the Board’s decision-making process. I would

like to congratulate Maggie on her new role and

Iam confident she will continue to ensure

thevoices of colleagues are clearly heard in

theboardroom.

Isabel Hudson

Designated Non-Executive Director for Workforce Engagement

and a member of the Colleague Board (2019-2024)

Colleague engagement mechanism – FY25 and

beyond

Maggie will be undertaking a series of colleague engagement

activities throughout FY25. The purpose of this engagement is to

listen and understand colleagues’ views and perspectives, and

enable her to communicate these back to the Board and integrate

them into decision-making. Through this, the Board will continue

to obtain direct insights into colleague sentiment at all stages of

the decision-making process.

Maggie will receive a quarterly written report collated by the

People, Ethics & Compliance team which will utilise the rich variety

of data sources available on colleague sentiment across the group,

including Your Say engagement survey results, inclusion, equity

and diversity data, and internal communications insight reports.

Whilst this report will be collated for Maggie as the Designated

Non-Executive Director for Workforce Engagement, she may

consider it appropriate to share this with the wider Board.

The People, Ethics & Compliance team will also schedule regular

colleague engagement sessions with Maggie to take place

throughout FY25, through in person visits and virtual calls. During

these sessions, colleagues will be encouraged to share personal

views and experiences. These sessions will include meetings with

the People Network leads, Trade Union representatives, and

attending internal events. Sessions will also be scheduled with

members of the reward team as appropriate, and in line with

colleague events and ahead of colleague-related Board

discussions, to ensure Maggie has insight into the colleague

sentiment on relevant topics.

In 2024, as part of Maggie’s Board induction programme, Maggie

visited two contact centres in Tyneside and Gosforth and listened in on

customer calls and digital chats and participated in two town hall

meetings with colleagues based at those locations. More information

on Maggie’s induction programme can be found on page 95.

The reports, together with the colleague engagement sessions,

will enable Maggie to provide the Board with a holistic view of

colleague sentiment across the group, and help ensure that the

colleague voice is represented in the boardroom.

The effectiveness of engagement with our colleagues will be kept

under review in FY25 and changes will be made where appropriate.

I have thoroughly enjoyed my first colleague

engagement experiences and I am looking forward

to engaging with our colleagues across the group.

We are fortunate to have a wealth of insightful

data available to provide an overview of our

colleagues’ sentiment and I shall pair this with

personal experience stories to provide the Board

with a well rounded picture. My goal is to ensure

that the colleague voice is represented in the

boardroom and is considered throughout the

Board’s decision-making process. Our colleagues

are our most important asset and I am passionate

about making sure they are able to inform the

decisions we make toward success.

Maggie Chan Jones

Designated Non-Executive Director for Workforce Engagement

BT Group plc Annual Report 2024

91 Corporate governance report

In their discussions and decisions during FY24, the directors of BT Group plc have acted in the way that they consider, in good faith,

would be most likely to promote the success of the group for the benefit of its members as a whole, having regard to stakeholders and

the matters set out in sub-sections 172(1) (a)–(f) of the 2006 Act.

The Board considers the matters set out in section 172 of the 2006

Act in its discussions and decision making, including:

The likely consequence of any decision in the long-

term:

– The Directors recognise that the decisions they make today will

affect the group’s long-term success. During the year, the Board

had particular regard to this in its discussions on group strategy

(see page 89). Our purpose and strategy demonstrate how we

realise our ambition and grow value for all our stakeholders. This

in turn guides the Board’s decisions, specifically the balance

between short and long-term investments. The third pillar of

ourstrategy – lead the way to a bright, sustainable future –

incorporates our aim to identify and develop new business

opportunities that will help us grow sustainably in the future.

More information on our strategy can be found on pages 18

to29.

The impact of the group’s operations on the

community and environment:

– The Responsible Business Committee continues to oversee the

progress of our Manifesto. This aims to accelerate growth

through technology that is responsible, inclusive and

sustainable, ensuring the group can continue to build trust and

create value for its stakeholders. The Committee also monitors

progress on the digital impact and sustainability strategy and

our sustainability goals. During the year, the Committee

considered and approved the group’s Carbon Abatement

Methodology which formalises our goal to help our customers

avoid 60m tonnes of carbon emissions through our products

andservices (see page 105).

– Information as to how we have addressed the recommendation

of the TCFD framework can be found on pages 71 to 80.

The desirability of maintaining a reputation for high

standards of business conduct:

– The Board acknowledges its responsibility for setting and

monitoring the culture, values and reputation of the group. Our

colleagues are central to us achieving this ambition and we’re

focused on building a culture where our colleagues can be their

best. During the year, the Board considered the group’s culture

in its decision making and discussions (see page 88).

– The Audit & Risk Committee also considered regular reports

from the General Counsel People, Ethics & Compliance on our

ethics and compliance policies and programmes and reports on

issues raised through Speak Up, BT Group’s confidential

whistleblowing service (see page 102).

The interests of our colleagues, and the need to foster

business relationships with our key stakeholders :

– The Board and its Committees understand the strategic

importance of stakeholders to our business. When making

decisions, the Directors have regard to the interests of

colleagues, and the need to foster business relationships with

other key stakeholders. We acknowledge that not every

decision we make will necessarily result in a positive outcome for

all our stakeholders, so the Board must balance competing

interests in reaching its decisions.

– While the Board engages directly with stakeholders on some

issues, the size and distribution of BT Group and our stakeholder

groups means that stakeholder engagement often happens

below Board level. However, the Board considers information

from across the group to help it understand how our operations

affect our stakeholders’ interests and views. More details on

how we engage with key stakeholders (including customers and

suppliers) on pages 40 to 45.

– Our colleagues are key to our success, and they are considered

as part of the Board’s discussions and decision making. The

Board and its Committees have reviewed colleague health and

wellbeing, our inclusivity, equity and diversity ambitions,

organisational culture and the impact of our transformation

programmes, as well as on employee relations (see pages 30

to33 for more details). More information on the Board’s

engagement with colleagues can be found on pages 90 to 91

and other colleague engagement channels are set out on

page41.

The need to act fairly between BT Group’s

shareholders:

– During FY24, the Chairman, Chief Executive, Chief Financial

Officer, other executives and the Investor Relations team held

222 meetings with investors (see page 43 for more detail on our

engagement with shareholders). These meetings gave investors

the opportunity to discuss views on all matters including:

– our strategy and competitive position in key markets

– our financial and operational performance

– capital investment (including FTTP and 5G)

– our capital allocation policy

– prospective governmental and regulatory policy decisions

– our pension fund valuation.

– The Board is mindful of having two significant shareholders

butconsiders any decisions it makes in the interests of all

shareholders.

BT Group plc Annual Report 2024

92 Corporate governance report

Section 172 statement

Decisions made during the year

The following are some of the decisions made by the Board during the year which demonstrate how section 172 matters have been

taken into account as part of Board discussions and decision making:

Decision

What happened

Sale of BT Tower

toMCR London

Holdings Limited

During the year, the Board discussed in detail the proposal to sell the BT Tower to MCR London Holdings

Limited, in particular:

– the need for future investment in the maintenance of the BT Tower

– how this fits with the simplification of the group’s property portfolio

– the costs and timescale for exiting the BT Tower

– the plans that had been put in place to mitigate risks to the network functionality of the BT Tower

– the approach that would be taken to relocate impacted colleagues who are currently based at the

BTTower

– the brand association element of the transaction, including the risks associated with permitting the use

of the BT brand and, if permitted, ensuring that relevant brand protections are in place

– the broader potential reputational impact of the sale.

On balance, the Board considered the long-term benefits of the sale, including the reduction in property

running costs, and agreed that these outweighed any risks. Having carefully considered the transaction

terms, in February 2024, the Board approved the sale of the BT Tower to MCR London Holdings Limited

for £275m with an anticipated completion date in FY30.

BT Pension Scheme

(BTPS) triennial

valuation

The Board was kept updated on negotiations with the BTPS Trustee on the triennial funding valuation as

at 30 June 2023. This included consideration of the range of possible funding deficit outcomes and the

associated deficit repair contributions. The Board was also reminded of its obligations under the Pension

Schemes Act 2021 and the approach of the Pensions Regulator.

The Board considered the contractual protections previously provided to the BTPS and their prospective

suitability. Specifically, the Board considered the circumstances in which it would be obliged to make additional

payments to the BTPS because of cash disposals, dividends or share buy-backs made. The Board also reviewed

the stabiliser mechanism and co-investment vehicle established as part of the 30 June 2020 valuation, and

considered the likelihood of additional payments being triggered and future refunds being received.

The Board considered the group’s capital allocation framework and the associated impact on its

keystakeholders. The Board noted the need to balance its objective to invest for growth, whilst supporting

the BT pension funds, maintaining a strong balance sheet and rewarding investors through its progressive

dividend policy. In October 2023, after careful consideration, the Board approved the proposed package

of measures which would form the 2023 valuation.

BT Group plc Annual Report 2024

93 Corporate governance report

Impacts of prior Board decision: funding of increased

and accelerated FTTP build plan from 20m to 25m

premises by December 2026

Summary of decision: In 2020, the Board approved the increase

of our FTTP build to 20m premises, subject to the outcome of

Ofcom’s Wholesale Fixed Telecoms Market Review (WFTMR).

Post the WFTMR, in May 2021, the Board further approved an

increased and accelerated FTTP build to 25m premises by the

end of December 2026. This was a difficult decision and in

making it, the Board considered competing stakeholder

interests, including the benefits to our customers, colleagues and

shareholders, the impact on communities and the desire to

support the Government’s fibre ambitions.

Impacts and outcomes: As a result of this Board decision, our

rollout of the FTTP network now passes 13.8m homes and

businesses, helping to better connect our customers. This year,

we passed an average of 68,000 premises per week. 4.7m

customers have now moved across and are enjoying the service

and benefits of full fibre.

Our full fibre network now also passes 3.9m rural premises

which has added value to local communities and helped bring

people together, supporting our purpose of we connect for good.

We brought full fibre broadband to Fair Isle, one of the UK’s most

geographically remote islands and Openreach had to reroute the

build by 100km, in order to avoid protected landscapes and bird

nesting season.

As a result of this Board decision, our rollout of the FTTP

network now passes 13.8m homes and businesses, helping

to better connect our customers.

13.8m

a Rural premises are defined according to Ofcom’s Area 3 classification.

FY24 Board and

Committee evaluation

In line with the Code, we annually undertake a formal and rigorous

evaluation of the performance of the Board and its Committees,

the Chairman and individual directors, which considers the Board’s

composition, diversity and effectiveness.

The last external evaluation was completed in 2021. Given the

changing composition of the Board (including a new Chief

Executive) we did not feel it was the right time for a once in three

year external evaluation. We therefore engaged Lintstock Limited

on a multi-year basis. Lintstock is an accredited Board

Performance Reviewer of the Chartered Governance Institute,

with no other links to the group. This year, they facilitated an

evaluation of our Board and Committees via questionnaires.

A more thorough, interview-based review by Lintstock, will take

place in FY25, at which point there will be a more stable

foundation in our Board to review and in turn, the evaluation will

provide greater value in terms of forward looking focus areas.

FY24 Evaluation Process

Tailored questionnaires were circulated to members, regular

attendees and the secretary of the Board and each of its

Committees. The Executive Committee and CEO, Openreach

also completed an evaluation to provide their perspectives on

the effectiveness of, and relationship with, the Board. The

evaluations were prepared by Lintstock in line with best

practice. These focused on composition, dynamics, succession

and how well-placed the Board is to add value to the business,

in terms of how it oversees strategy, risk management,

colleagues, culture and performance. Focus was also given to

core areas of governance, the Board’s decision making

processes, as well as how well it considers stakeholders as part

of its discussions.

The Senior Independent Director undertook a discussion

with the other Non-Executive Directors and Deputy

Company Secretary, without the Chairman present, to

obtain their feedback and views of the Chairman’s

performance during theyear. The outcomes and

recommendations were fed backto the Chairman.

Lintstock reflected on the responses and feedback, and

compiled reports for the Board and each of the Committees,

formulating a number of key observations and suggested

priorities for the coming year, ensuring the anonymity of

respondents was respected.

See the table opposite for more detail.

Key areas of focus for

FY25

Agreed actions/actions in progress

Support for the

Chief Executive

to focus on

priorities

Support Allison Kirkby in her role as Chief

Executive with a focus on culture and talent.

Talent breakfasts have been scheduled with

the Board in FY25 to enhance visibility of

potential Executive Committee successors

in an informal setting.

Board

composition

Consider and appoint additional Non-

Executive Directors to the Board with

financial, telecommunications and

regulatory experience.

Tushar Morzaria was appointed as an

Independent Non-Executive Director in

May 2024. Tushar has gained strategic

financial management experience over 25

years and is a member of the Audit & Risk

Committee with recent and relevant

financial experience in line with the Code.

He will also provide additional expertise on

the Remuneration Committee.

The Board continues to consider potential

Non-Executive Director appointments.

Meeting time

and focus areas

Work is underway to reassess how time is

dedicated at the Board and the

Committees to:

– allow more time for culture, performance,

transformation agenda

– reflect on the effectiveness of past

decisions

– increase oversight of non-financial risks

by the Audit & Risk Committee, including

Speak Up reports and what these indicate

in terms of the group’s culture

– arrange Board meetings or off-sites in

different BT Group locations

– increase Non-Executive Director only

sessions.

The company secretarial team continues to

work with the business units to improve the

clarity of purpose of Board materials to best

support the Board’s consideration of

stakeholder interests in its decision making.

Commitments

compliance and

consumer

fairness

Effectively transition the responsibilities

from the BT Compliance Committee to the

Audit & Risk and Responsible Business

Committee including training and support

for Committee members.

BT Group plc Annual Report 2024

94 Corporate governance report

Board composition, succession and evaluation

Board induction

On appointment, Directors undertake a comprehensive induction

programme designed to give them a thorough overview and

understanding of the business. This is tailored to take into account

the director’s previous experience, their responsibilities and, for

each Non-Executive Director, the specific responsibilities relevant

to their Committee memberships. The programme includes

meetings with the Chairman, Board members, the Executive

Committee and senior management. Directors also receive key

information on our strategy and KPIs, governance framework, the

regulatory framework in which we operate, recent financial

performance, risk management and internal control systems and

the policies supporting our business practices.

Directors are encouraged to visit our different hubs, contact

centres and BT/EE retail shops, as well as spend a day with an

Openreach engineer.

Details on the Board changes made during the year can be found

in the Nominations Committee Chair’s Report on page 97.

Maggie and Ruth’s inductions

Maggie and Ruth joined the Board on 1 March and 6 April 2023

respectively as Independent Non-Executive Directors. Maggie is

the Designated Non-Executive Director for Workforce

Engagement and Ruth was appointed as Senior Independent

Director and Chair of the Remuneration Committee from the

conclusion of the 2023 AGM. Both Maggie and Ruth are members

of the Nominations Committee, Maggie is a member of the

Responsible Business Committee and Ruth is a member of the

Audit & Risk Committee.

Maggie and Ruth received an induction pack with key reference

materials that provided them with a thorough understanding of

BTGroup, including the most recent financial results, information

on our strategy and each of our business units, the governance

framework, director responsibilities, ethical policies and

theCommitments.

Throughout their first few months on the Board, Maggie and Ruth

individually held a number of induction meetings including with

the Chairman, Chief Executive, Chief Financial Officer, and

members of the Executive Committee and key senior leaders,

including the Director of Investor Relations, the heads of the

business units, as well as the CEO, Openreach. The sessions

included the following areas:

– Group Strategy

– Consumer

– Business

– Openreach

– Corporate Affairs

– Digital, Data & AI

– Security & Networks

– HR & our colleagues

– Financial processes, funding and risk management

– Regulatory context

– Governance.

In addition, Ruth met with the Group Director of Reward given her

role as Chair of the Remuneration Committee and Matthew Key, in

his capacity as Chair of the Audit & Risk Committee.

In May 2023, Maggie and Ruth joined Clive Selley, CEO,

Openreach on an Openreach field visit in different locations across

London and Essex, which provided them with a deeper insight into

our fibre rollout and the experiences of colleagues in these roles.

In February 2024, Maggie and Ruth visited our Tyneside and

Gosforth contact centres. They met with a range of colleagues and

benefitted from seeing our strategic plans for the customer facing,

front line part of the business come to life. They listened in on

customer calls and digital chats and were guest speakers at the

two colleague town hall meetings where they had the opportunity

to listen to colleagues and answer questions. For Maggie, as the

new Designated Non-Executive Director for Workforce

Engagement, this visit was invaluable in providing her with a better

understanding of BT Group priorities and our strategy relating to

colleagues. Further detail can be found in the colleague

engagement section on page 90 to 91.

BT Group plc Annual Report 2024

95 Corporate governance report

The part that’s always the most

impactful for me was seeing and

experiencing our teams in action.

Maggie Chan Jones

Designated Non-Executive

Director for Workforce Engagement

Maggie Chan Jones

Designated Non-Executive

Director for Workforce

Engagement

Ruth Cairnie

Senior Independent

Non-Executive

Director

This year, on behalf of the Board, the Committee led the process

to appoint Allison as our new Chief Executive. We also welcomed

new directors to the Board, Ruth, Raphael and Tushar. I look

forward to supporting Allison and our newest Board members as

we drive our long-term strategy to transform the group, ensuring

it delivers for all our stakeholders.

Adam Crozier

Chair of the Nominations Committee

15 May 2024

Committee role

The Committee is responsible on behalf of the Board for reviewing:

– the structure, size and composition of the Board and its

committees to ensure an appropriate balance of skills,

experience, diversity, independence and knowledge

– succession planning for the Board and recommending the

appointment of Executive and Non-Executive Directors and

theChairman

– succession planning and performance of the Executive

Committee.

The Committee’s key responsibilities are set out in its terms

of reference available at bt.com/governance

Committee membership and attendance

All Non-Executive Directors are members, with the Chief

Executive attending meetings where appropriate. The Deputy

Company Secretary is secretary to the Committee and he, or his

delegate, attends all meetings and provides guidance, advice and

support as required.

Committee members and attendees do not attend discussions

where a conflict exists. During the year, five scheduled Committee

meetings were held. After each meeting, as Chair, I reported back

to the Board on the Committee’s activities.

Meetings attended

Adam Crozier (Chair) 5/5 Steven Guggenheimer

4/5

Adel Al-Saleh

3/4 Isabel Hudson 5/5

Ruth Cairnie

4/4 Matthew Key 5/5

Maggie Chan Jones

4/5 Allison Kirkby

4/5

Ian Cheshire

1/1 Raphael Kübler

1/1

Iain Conn

1/1 Sara Weller 5/5

a Adel attended all bar one meeting where he was excused and he stepped down from

the Board and this Committee on 31 December 2023.

b Ruth joined the Board on 6 April 2023.

c Maggie gave apologies for the September meeting due to a pre-existing conflict.

d Ian and Iain stepped down from the Board and this Committee at the conclusion of the

2023 AGM.

e Steven gave apologies for the July meeting due to a pre-existing conflict.

f Allison attended all Committee meetings during the year as a Non-Executive Director

except for the July meeting where she was excused.

g Raphael joined the Board and this Committee on 30 January 2024.

Details on the FY24 Board and Committee evaluation can be

found on page 94.

Committee focus in FY24

Chief Executive appointment

As announced during the year, Philip Jansen informed the Board

that he intended to step down from his role as BT Group Chief

Executive. As a result, a sub-set of the Committee spent

significant time building on the Board’s succession plans and

focusing on appointing the next Chief Executive, which ultimately

culminated in Allison’s appointment.

In the first half of the year, we commenced a formal

succession process to appoint the next Chief Executive, to

succeed Philip Jansen. As Chairman, I led the process, with a

sub-set of the Committee. Allison was not present for any of

these discussions.

Spencer Stuart, an independent external search agency,

who has no other connection to the BT Group, or any of the

Directors, was appointed to facilitate the process. Spencer

Stuart is a signatory of the Voluntary Code of Conduct for

Executive Search Firms (in line with our Board Diversity and

Inclusion Policy).

Further to a discussion on the essential experience,

leadership and personal characteristics, capabilities and

skills required, and having considered the future needs of

the business, a candidate profile was agreed. In line with

that profile, a shortlist of appropriate, diverse candidates

was considered.

A comprehensive benchmarking, assessment and interview

process was conducted. The sub-committee focused on

understanding candidates’ approaches to the role of Chief

Executive, their styles of leadership, and the culture they

would foster throughout the organisation. It discussed

feedback on the individuals and reflected on each of the

shortlisted candidates based on their skills, capabilities and

experience, against the role profile.

The Committee subsequently concluded that Allison was

the preferred candidate to succeed Philip as Chief

Executive, given her proven leadership, deep sector

experience and history of having transformed businesses.

Further to the Committee’s recommendation, in which they

also considered her external commitments outside of this

role, a sub-committee of the Board approved the

appointment of Allison as Chief Executive. Allison became

Chief Executive on 1 February 2024.

BT Group plc Annual Report 2024

96 Corporate governance report

Board composition, succession and evaluation continued

Nominations Committee Chair’s report

Non-Executive Director appointments

The Committee also spent time considering additional Non-

Executive Directors. Russell Reynolds Associates, an independent

external search consultant, who has no other connection to the BT

Group, and who is a signatory of the Voluntary Code of Conduct

for Executive Search Firms, was engaged to assist with the search.

In light of changes to the Board over the past year, the Committee

prioritised the skills, experience and background when considering new

Board appointments. As such, the search was predominantly for

candidates with financial experience to supplement the capabilities of

the Audit & Risk Committee, especially in light of Allison stepping down

from the Committee on her appointment as Chief Executive, CEO

experience potentially in a transformation focused role, and regulatory

experience. As in all searches, diversity continued to be a key

consideration. Russell Reynolds was tasked with enabling us to make

appointments that meet the aims and targets of our Board Diversity

and Inclusion Policy and related targets and succession planning.

In line with the brief, the Committee agreed a shortlist of candidates

with Russell Reynolds, with discussions held around ensuring the

shortlist was diverse from both a gender and ethnicity perspective. A

sub-set of the Committee was formed to lead the process, comprising

of the Senior Independent Director (and Chair of the Remuneration

Committee), and the Chairs of the Audit & Risk and Responsible

Business Committees, as well as the Chief Executive.

Further to a comprehensive benchmarking, assessment and interview

process, the sub-committee discussed feedback and made its

recommendation to the Board. In April 2024, on recommendation

from the Committee, the Board approved in principle the

appointment of Tushar Morzaria as an Independent Non-Executive

Director. Final approval was delegated to the Chairman and Company

Secretary and they subsequently approved Tushar’s appointment with

effect from 7May 2024. Tushar brings a wealth of strategic financial

management experience to our Board, gained over 25 years where he

has overseen transformation programmes and has strengthened risk

and control frameworks. Tushar is a member of the Audit & Risk

Committee and has recent and relevant financial experience in line

with the Code, as well as being a member of this Committee and the

Remuneration Committee. The Committee and the Board considered

Tushar’s other external commitments as part of this appointment

process and more details on this can be found opposite.

Executive Committee succession planning and talent

Throughout the year, the Committee reviewed:

– and approved the creation of a new Executive Committee role

reporting to the Chief Executive titled the Chief Strategy and

Change Officer to lead a new Strategy and Change unit. The

purpose of the Chief Strategy and Change Officer role is to:

– drive the development of BT Group’s corporate strategy

– ensure alignment of Unit strategies with the corporate strategy

– develop a single, aligned strategic narrative and equity story

for BT Group

– define, drive and integrate critical, cross-Unit change

programmes to deliver against the BT Group objectives.

– the performance and succession planning of Executive

Committee members. The Committee continues to focus on

broader Executive Committee succession planning, including

oversight of the talent pipeline with a focus on diversity

– key talent at the senior leadership level. The Committee

reflected on the importance of identifying critical roles and

building stronger and broader diversity of experience, gender

and ethnicity, as well as commercial, technology and

transformation capabilities, both through potential external

candidates and through our internal talent pipeline

– external appointments of Executive Committee members, in line with

our policy on external interests for Executive Committee members

(including Executive Directors) and the CEO, Openreach. Under this

policy, proposed external directorships and other significant external

interests must not be to an organisation that is a BT Group

competitor/major supplier to BT Group, create a conflict of interest

for the individual with their role at BT Group, involve significant

amounts of BT Group working hours or impede the ability of the

individual to perform their BT Group role, or involve disproportionate

incentives or remuneration, with reference to the time commitment

of the role. Any fees or other incentives arising from such

appointments may be retained by the individual, subject to the

amount being proportionate.

Time commitment

On accepting their appointment, Directors must confirm they are

able to allocate sufficient time to discharge their responsibilities

effectively. Directors are expected to attend meetings of the

Board and any Committees of which they are members, as well as

the AGM and Board off-sites. Directors are also expected to

devote sufficient time to prepare for each meeting and to

participate in other site or office visits to understand the business

better. Before accepting new external appointments, directors are

required to obtain the prior approval of the Board.

Before recommending that the Board approve the appointment of

Allison Kirkby as Chief Executive, the Committee considered her

other commitments, notably her directorship of Brookfield Asset

Management Limited. The Committee considered the time

commitment to be reasonable and was comfortable that Allison’s

directorship at Brookfield would not affect her ability to dedicate

sufficient time to the group in her new role as Chief Executive or

create any conflicts of interest. It’s also within the overboarding

guidelines published by proxy agencies.

The Committee also considered Simon Lowth’s proposed

appointment to the Board of Smith & Nephew as an Independent

Non-Executive Director and as a member of their Audit and

Nomination & Governance Committees. The Committee

considered the role and the time commitment it would require and

was comfortable that Simon would still have sufficient time to dedicate

to his role at BT Group if he was to take on this external commitment.

As part of the Committee’s decision to appoint Tushar Morzaria tothe

Board, it thoroughly considered his other commitments, notably his

roles as a Non-Executive Director of both Legal & General Group and

BP. Tushar also chairs the Audit Committee for both companies. The

Committee considered corporate governance guidance including the

overboarding guidelines published by proxy agencies. On balance,

both the Committee and the Board were comfortable that Tushar’s

other commitments were acceptable and would not affect his ability

to dedicate sufficient time to the group in his new role as a

Independent Non-Executive Director or create any conflicts of

interest. The Committee and the Board were in agreement that

Tushar’s skills and experience would be a strong addition to the

Board and proceeded to appoint him with effect from 7 May 2024.

Election and re-election of directors

The Committee considered, in respect of each director, their skills and

experience, time commitment and tenure as part of its recommendation

to the Board in relation to the directors put forward for election or

re-election at the AGM. The Board believes that each director it has

recommended to shareholders for election or re-election at the 2024

AGM brings considerable knowledge, wide-ranging skills and

experience to the Board, makes an effective and valuable contribution

and continues to demonstrate commitment to their role.

On recommendation from the Committee, the Board also considered

the continued independence of Non-Executive Directors as part of its

consideration of the re-election recommendations. The Board continues

to consider all Non-Executive Directors as being independent in line

with the Code, with the exception of Deutsche Telekom’s nominated

representative. The Chairman was judged to be independent at the

time of his appointment.

Details of directors’ contracts or letters of appointment are in

the Annual remuneration report on page 121.

BT Group plc Annual Report 2024

97 Corporate governance report

Training and development

The Chairman and the Company Secretary keep the training and

development needs of Directors under review. Non-Executive

Directors regularly meet with management, enhancing their

understanding of the business through briefing sessions. We

encourage all Directors to keep their skills and knowledge up to

date and to ask for any support they need. As part of ongoing

development, the Company Secretary (or her delegate) briefs the

Board and its Committees at each meeting, as relevant, on any key

legal, regulatory and corporate governance developments. During

the year, these briefings included updates on the new Code,

institutional investor guidelines, the FTSE Women Leaders

Review, the Parker Review and other governance publications.

Directors are updated as required on developments in the

environment in which the group operates and internal and external

advisers are invited to meetings to provide updates as necessary.

Openreach Limited Board succession

Under its remit, the Committee has a responsibility to consider

changes to the Openreach Limited Board and recommend any

changes to the BT Group Board for approval. During the year, the

Committee noted that the Openreach Chair and Openreach Non-

Executive Directors continue to satisfy the independence criteria

and should continue in their roles.

Inclusion, equity and diversity

The Board Diversity and Inclusion Policy sets out our approach to

diversity on the Board and our aim to have a well-balanced Board

with the appropriate skills, knowledge, experience and diversity to

meet our business needs and support our strategic aim of building

the strongest foundations (see bt.com/governance).

The policy ensures we:

– apply an inclusion lens to all our decision-making processes

– monitor the impact of our decisions on diverse populations

– value and communicate the benefits that difference brings and are

unapologetic in our pursuit of a diverse workforce at all levels

– actively seek out opportunities across the business to enhance

and strengthen our approach to inclusion.

Whilst we appoint candidates based on merit, we continue to

challenge our external search consultants to ensure that all forms

of diversity are considered when drawing up candidate lists. This

isa key consideration for our searches.

Diversity is considered in the broadest sense and all forms of

difference are considered, including age, gender, nationality,

independence, professional background, social and ethnic

backgrounds, business and geographic experience, as well as

cognitive and personal strengths. These are considered in reviewing

the composition of the Board and, where possible, are appropriately

balanced. We believe a key driver in delivering our diversity

commitments across the organisation is through a Board which has

this balance of skills, experience, diversity and knowledge.

As at 31 March 2024, five of our ten Board directors were female

(50%), two directors were from an ethnic minority background

(20%), and one director has a disability.

Ruth Cairnie’s appointment during the year as Senior Independent

Non-Executive Director ensures that we meet the requirements of the

Listing Rules to have female representation in at least one of the four

senior board positions. This position was reinforced by Allison’s

appointment as Chief Executive from 1 February 2024, meaning that

half of the four senior board positions are now held by women.

Details of the group’s inclusion, equity and diversity strategy,

includingits objectives, implementation and progress can be found

onpages 31 to 33.

Chairman and Non-Executive Directors’ tenure:

As at 31 March 2024

Chairman and Non-Executive Directors’ tenure:

Post 2024 AGM

BT Group plc Board

Senior positions on theBoard

(CEO, CFO, SID andChair)

Executive management

(Executive Committee,

including the Executive

Directors and the CEO,

Openreach)

as at

31 March 2024

post

2024 AGM

as at

31 March 2024

post

2024 AGM

Gender

Male

5 (50%)

6 (60%)

2 2 6 (60%)

Female

5 (50%)

4 (40%)

2 2 4 (40%)

Ethnicity

Asian/Asian British

1 (10%)

2 (20%)

1 (10%)

Mixed/multiple ethnic groups

1 (10%)

White British or other White background

8 (80%)

7 (70%)

4 4 8 (80%)

Disability

Senior leaders

Female

28 (33%)

Male

56 (67%)

a This includes the Minority-white group.

b This includes the Executive Committee, including the Company Secretary and CEO, Openreach and their direct reports (excluding the Executive Directors).

BT Group plc Annual Report 2024

98 Corporate governance report

Board composition, succession and evaluation continued

Nominations Committee Chair’s report continued

This year, the Committee has continued to focus its oversight on

the group’s risk, control and assurance framework and has also

spent considerable time scrutinising the major legal claims the

BT Group is facing.

Matthew Key

Chair of the Audit & Risk Committee

15 May 2024

Committee role

The Committee is responsible on behalf of the Board for:

– monitoring the integrity of the financial statements and

overseeing the financial reporting process

– reviewing the effectiveness of the group’s systems of risk

management and internal control

– reviewing the effectiveness of the internal audit function

– approving the appointment, reappointment, remuneration

ofthe external auditor, as well as the terms of the engagement

and the provision of any non-audit services, overseeing the

external auditor’s independence and effectiveness in

deliveringa quality audit.

From 1 April 2024, and following the disbanding of the

BT Compliance Committee, the Committee’s remit expanded to

include oversight of the group’s compliance with the

Commitments. Further detail on how the Committee has fulfilled

these responsibilities will be included in next year’s report.

The Committee’s key responsibilities are set out in its terms

of reference available at bt.com/governance

Committee membership and attendance

The Committee members are all Independent Non-Executive

Directors with a range of skills, and the Committee as a whole has

experience relevant to the sector and acts independently of

management. Throughout the year, Allison attended all

Committee meetings in her capacity as a Non-Executive Director

and both she and I have recent and relevant business and financial

experience, in line with the Code, as set out in our biographies.

Allison stepped down from the Committee on her appointment as

Chief Executive in February 2024. Tushar Morzaria was appointed

to the Board and this Committee in May 2024 and has recent and

relevant financial experience. The Deputy Company Secretary is

secretary to the Committee and he, or his delegate, attends all

meetings and provides guidance, advice and support as required.

The Chairman, Chief Executive and Chief Financial Officer attend

Committee meetings as required.

Private Committee sessions with the Non-Executive Directors and

the internal and external auditor were held at each meeting

without management being present. The external auditor was not

present at meetings where their performance and/or their

remuneration was discussed.

Meetings attended

Matthew Key (Chair) 6/6 Iain Conn

2/2

Ruth Cairnie

5/5 Allison Kirkby

6/6

Ian Cheshire

2/2 Sara Weller 6/6

a Ruth joined the Committee on her appointment to the Board on 6 April 2023.

b Ian and Iain stepped down from the Board and this Committee at the conclusion of the

2023 AGM.

c Allison ceased being a member of the Committee when she became Chief Executive

on 1 February 2024 but still attends meetings in her capacity as Chief Executive.

Other attendee (x Regular attendee • Attends as required)

Chief Executive ×

Chief Financial Officer ×

Director of External Reporting and Financial Control ×

Director of Group Internal Audit and Group Risk ×

General Counsel, Company Secretary & Director

Regulatory Affairs

Group Risk Director •

General Counsel, People, Ethics & Compliance •

Details on the FY24 Board and Committee evaluation can be

found on page 94.

Committee focus in FY24

The Committee met six times this year. As Committee Chair, I met

with the KPMG lead audit partner, Director of Group Internal Audit

and Group Risk, and management as appropriate ahead of

meetings to discuss specific items of focus to report to the

Committee. After each meeting, I also reported back to the Board

on the Committee’s activities, the main issues discussed and

matters of particular relevance, with the Board receiving copies of

the Committee’s meeting papers and minutes.

Financial reporting

During the year, the Committee considered the full year and half

year results, and the Q1 and Q3 trading updates. It reviewed the

quality of accounting policies and practices, as well as critical

accounting estimates and judgements.

The Committee considered, and was satisfied with:

– the processes supporting the preparation and consolidation of

the financial statements, including consistent application of the

accounting policies, and the ongoing verification by

management and the external auditor

– management’s accounting judgements and the appropriate

application of the accounting policies, having also discussed

these with the external auditor.

The Committee exercised its judgement when considering matters

related to the financial statements, and recommended approval

by the Board of each of our full year and half year results, Q1 and

Q3 trading updates and the Annual Report.

BT Group plc Annual Report 2024

99 Corporate governance report

Audit, risk and internal control

Audit & Risk Committee Chair’s Report

Overview of the year

Focus Considered by the Committee

2023 2024

Apr May Jul Sep Oct Jan

Financial reporting

– Results/trading updates and accounting judgements

– Annual Report 2023

– Regulatory financial statements

– Going concern assessment

– Viability statement

Litigation and major contentious matters

Internal controls over financial reporting

GRCs and CFU risk reviews: point and emerging risks

Report from Openreach Board, Audit, Risk & Compliance Committee chair

Compliance with Code requirements – risk management framework

Ethics & compliance

– Ethics & compliance programmes

– Speak Up (whistleblowing) reports

Internal audit

– Internal audit report

– FY24 group internal audit plan and approach

– Group internal audit charter

– Effectiveness

External audit – KPMG

– External audit report

– External audit plan

– Audit and non-audit fees

– Effectiveness

– Independence and reappointment

Fair, balanced and understandable

In May 2024, the Committee reviewed the Annual Report 2024

having previously fed back on earlier drafts. The Committee

concluded that the Annual Report, taken as a whole, was fair,

balanced and understandable and provided the information

necessary for shareholders to assess the group’s position,

performance, business model and strategy, and the potential

impact on forward-looking assumptions supporting going

concernand viability assessments.

In its assessment, it considered that the following had been carried

out and this formed the basis of its recommendation to the Board:

– a verification process covering the factual content reviewed

bythe internal audit team

– comprehensive reviews by different levels of management,

including the Executive Committee, to consider the messaging

and ensure consistency and overall balance

– independent reviews by the external auditor which did not

highlight any material inconsistencies.

BT Group plc Annual Report 2024

100 Corporate governance report

Audit, risk and internal control continued

Audit & Risk Committee Chair’s Report continued

Significant matters related to the financial statements

and how these were addressed:

Group accounting policies, critical and key accounting

estimates and significant judgements

The Committee considered the accounting policies and disclosures in

the consolidated financial statements regarding critical and key

accounting estimates and significant judgements as summarised

in note 2 of the financial statements. These include the estimate of

our customer refund liability, our goodwill impairment assessment,

determining the point of sale of BT Tower, the valuation of our

pensions assets and liabilities, taxation, contingent liabilities

associated with litigation, provisions, determination of lease terms

including reasonable certainty, and valuation of investments in the

Sports joint venture. More detail on the Committee’s oversight of

these matters is set out below where appropriate.

Going concern assessment

The Committee considered management’s forecasts of group

cash flows and net debt, as well as the group’s liquidity

requirements and borrowing facilities, including downside

scenarios from the viability model as discussed below. Following

this review and a discussion of the sensitivities, it confirmed that

the going concern basis of accounting continues to be an

appropriate basis of preparation for the financial statements

andecommended it for approval by the Board. See page 126.

Viability statement

The Committee reviewed the process and assessment of the

group’s prospects, taking into account the group’s current position

and principal risks. The Committee also considered the group risks

in management’s stress testing model, including the review of

downside scenarios and a combined ‘severe but plausible’ scenario

where multiple interconnected risks materialise. The Committee

was satisfied that the viability statement could be provided and

recommended it for approval by the Board. See pages 81 to 82.

Litigation provisions and contingent liabilities

The Committee reviewed contingent liabilities associated with

litigation and major contentious matters throughout the year.

There has been a noted increase in the value of the gross risk

facedby the Group, which is largely as a result of the increasing

prevalence of collective proceedings (sometimes known as class

actions) in the UK. During the year, the Committee has placed

particular focus on understanding and scrutinising legal

assessments by the Group’s external and internal legal advisers

ofthe claims that have materialised, to ensure the adequacy

ofitsprovisions.

Business revenue

The Committee considered and discussed the risk of billing

inaccuracy and control deficiencies that had been identified in

Business in relation to legacy systems and processes. They

discussed the impact of these including potential customer

impacts. The Committee also spent time understanding the

associated potential revenue risk, the root causes, the approach

toprioritise a remediation plan and considered the different

approaches of estimating what the potential liability may be.

TheCommittee considered and was satisfied with the judgements

for the liability.

Goodwill impairment

The Committee received and discussed the key assumptions,

operating cash flow forecasts, resulting headroom or impairment

and the sensitivity analysis performed by management. They

spent time understanding the balance of the plans and the

uncertainty around the different judgements contained within it.

The Committee considered and was satisfied with the key

assumptions and agreed that a goodwill impairment charge was

required in FY24 for Business.

BT Tower

The Committee considered the accounting for the sale of BT Tower,

including the judgement made in concluding that control of the Tower

passes to the buyer on completion of the sale and transfer of legal title,

rather than on exchange of contracts in FY24.

Sports joint venture

The Committee reviewed the judgements in relation to the

sportsjoint venture with Warner Bros. Discovery, Inc., which has

been in place for over 12 months, including assessments of the JV

business performance, cash flow forecasts and the valuation of

BTGroup’s interest in the JV.

Pensions

The Committee considered the assumptions and judgements

underlying the valuation of the pension assets and liabilities in the

financial statements, as summarised in note 19 to the consolidated

financial statements. It also considered the range of reasonable

assumptions and the associated impacts on the balance sheet,

income statement and related disclosures.

Divestments

The Committee reviewed the judgements made in relation to the

group’s divestments, including on whether the held for sale criteria

had been satisfied, and how goodwill should be allocated to

divested or held for sale entities.

Regulatory finance reporting

The Committee supported the processes and systems

enhancements that were implemented to ensure that the group

met its 2024 regulatory financial reporting obligations.

Other matters

The Committee reviewed specific items quarterly, and

consideredand agreed that they were appropriately categorised.

It considered management’s view of the quality of earnings,

definition of alternative performance measures and of the

effective tax rate. It also challenged the phasing of working

capitalwithin normalised free cash flow. At each quarter, it

considered a detailed assessment of provisions, and the

Committee was satisfied with the analysis provided in relation

tothe results.

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101 Corporate governance report

Risk management and internal controls systems

The group has continued to enhance its risk, control and assurance

framework. This framework provides the tools to enable us to be

smart with risk and to manage enduring risks consistently and

efficiently across the group.

Further information on our risk management framework and

principal risks can be found on pages 61 to 70.

The framework divides the risk landscape into areas of enduring

risk called Group Risks Categories (GRCs), which cover strategic,

financial, operational and compliance risks. The Board monitored

the effectiveness of the group’s systems of risk management and

internal controls through reviews of the GRCs and consideration of

reports from management, as well as from internal audit and other

assurance functions. Much of this work was undertaken by this

Committee on the Board’s behalf. Given that the Board is

ultimately responsible for the group’s systems of risk management

and internal controls, as Chair, I subsequently reported the key

matters from each of these sessions to the Board.

The activities carried out during the year, collectively enable

theCommittee to confirm that the group’s systems of risk

management and internal control have been appropriately

reviewed. Where required, targeted improvements have been

planned or agreed to continue to transform our control

environment and to appropriately manage risks. As part of its

drivefor continuous improvement, the Committee has overseen

ongoing enhancements to the risk management framework.

Further information on improvements being made to the overall

risk management framework, as well as specific actions taken to

manage our principal risks can be found on pages 61 to 62.

The Committee held discussions on the GRCs with the Executive

Committee risk owners to understand current and anticipated risk

developments, and reviewed how effectively the risks are being

managed. It considered the risk appetite and its supporting

metrics for the GRCs, the effectiveness of the controls, mitigation

activities and any areas for improvement. The Committee robustly

assessed both current, specific concerns (point risks) and

uncertainties that may materialise in the future (emerging risks),

particularly as a consequence of adverse changes to the

economic, social, regulatory, political or technology environment,

or as an unintended consequence of new products and services

being offered or developed by the group. The Committee agreed

with management any actions required to manage or mitigate

these risks effectively.

In addition, with the CFU and CU CEOs, the Committee undertook

unit risk reviews of Consumer, Business and Openreach, as well as

Digital and Networks, which cover how the GRCs are being

managed in the respective units, and the significant point and

emerging risks.

As well as the rolling programme of reviewing the GRCs and units,

the Committee received updates on specific matters including

supply chain and geopolitical risks in specific jurisdictions and our

group-wide data programme.

Ethics and compliance

The Committee considered regular reports on our ethics and

compliance policies, and programmes and related learnings and

culture. It spent time discussing anti-bribery and corruption,

communications regulation compliance and the enhancement

programme in relation to international trade, in line with the

respective GRCs.

Each quarter, the Committee received and reviewed reports on

concerns raised through the Speak Up service, BT Group’s

confidential whistleblowing services operated by an independent

company, 24 hours a day, in multiple languages, for both written

and telephone reports. The Committee ensures that

arrangements are in place for the proportionate and

independentinvestigation of these and other matters via the

ethics and relevant subject matter expert team.

Internal audit

Internal audit provides independent, objective and timely

assurance to senior management and the Board, through this

Committee, over the design and operational effectiveness of

keyprocesses and controls that manage the risks across

theorganisation.

During the year, the Committee:

– reviewed and approved the group internal audit annual plan,

ensuring it aligned to the principal risks of the business

– reviewed the internal audit charter, which establishes internal

audit’s independence, authority, remit and reporting lines to

conduct its work

– received regular reports from internal audit on its activities

andprogress against the group internal audit plan, allowing

theCommittee to monitor delivery against the plan

– held in-depth discussions with management on all internal audit

reports where controls were assessed as ‘inadequate’, and

action plans to address these. The actions were tracked by the

Committee, including the responsiveness of management to the

findings and recommendations, and the progress of closing any

overdue actions.

An internal audit effectiveness review was completed during the

year by the new Director of Group Internal Audit and Group Risk

with support from a third party. Actions were agreed to ensure the

function continues to develop. Based on this and the Committee’s

annual assessment of the performance and effectiveness of the

function, the Committee concluded that internal audit continues to

add value in the context of the group’s overall assurance framework.

External audit

The Committee is responsible for making recommendations

totheBoard on the reappointment of the external auditor,

determining their independence from the group and its

management and agreeing the scope and fee for the audit. The

Committee concluded that the reappointment of KPMG should

berecommended to shareholders at the 2024 AGM.

Following the audit tender in FY17, KPMG was appointed as

BTGroup’s external auditor from the conclusion of the 2018 AGM.

The FY24 audit is KPMG’s sixth audit of BT Group. Following a

thorough review of potential candidates put forward by KPMG

tosucceed John Luke as lead audit partner, the Committee

approved the appointment of Jon Mills as the KPMG lead audit

partner for the BT Group with effect from the start of FY24.

During the year, the Committee:

– considered and approved the proposed external audit fees for

the year ended 31 March 2024, including one-off fees, as well as

the recurring audit fee for the regulatory financial statements

and the interim review fee (see the Independent auditor’s report

on pages 132 to 143 for more details)

– reviewed with the external auditor, the external auditor’s scope

of work, audit plan and strategy for FY24

– approved the engagement letter of the external auditor

– recommended approval by the Board of management’s letters

of representation.

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102 Corporate governance report

Audit, risk and internal control continued

Audit & Risk Committee Chair’s Report continued

As part of my year-end report to the Board, I informed the Board

of the outcome of the external audit.

BT Group confirms that it complies with the EU Regulation on

Audit Reform and the Competition and Markets Authority’s

Statutory Audit Services Order with regard to mandatory auditor

rotation and tendering.

Independence and non-audit services

The Committee discussed the external auditor’s independence

and potential areas that could give rise to a conflict of interest,

andconsidered the safeguards in place to prevent compromising

their independence and objectivity. In particular, the Committee

considered BT’s provision of network and mobile services to

KPMG UK, including KPMG’s assessment and conclusion of

independence. The Committee considered this and confirmed its

agreement that the provision of these services to KPMG is not

material from an independence perspective.

BT Group’s non-audit services policy sets out the non-audit

services that can be provided by the external auditor, in line with

the latest ethical standards. The external auditor is not permitted

to perform any work which they may later be required to audit, or

which might affect their objectivity and independence, or create

aconflict of interest. Internal procedures describe the approval

process for work performed by the external auditor, and these

applied to KPMG throughout the year. The Committee monitored

compliance with the policies and procedures and considered

business relationships with the external auditor, and the level and

appropriateness of non-audit services and fees. The Committee

will continue to keep under review BT Group’s non-audit

servicespolicy.

Our non-audit services policy can be found at bt.com/

governance

The Committee reviewed the confirmation and information

received from the external auditor on the arrangements that it has

in place to safeguard auditor independence and objectivity, which

are consistent with the ethical standards published by the FRC,

including specific safeguards where they provide permissible non-

audit services to the group. The nature of the non-audit services

carried out by the external auditor during the year are described in

note 8 to the consolidated financial statements on page 161.

These were required by law or regulation to be carried out by an

appointed auditor and services that support us to fulfil obligations

required by law or regulation, contractual requirements, or

represented areas of assurance work where it was materially more

efficient for the external auditor to be engaged, as opposed to

another third party due to the work completed in relation to the

audit, and which were permitted to be performed by an auditor

under the Revised Ethical Standard 2019.

Audit-related assurance services, as well as any approved non-

audit services performed by KPMG, are considered a low threat

toauditor independence. Non-audit services are predominantly

made up of audit-related assurance services, such as the audit of

the regulatory financial statements, the interim review and

providing comfort letters for bond issuances. This work falls within

the scope of limited permissible services, which are closely related

to existing audit work that KPMG provides. Therefore the

proportion of ‘other non-audit services’ to ‘total services’

carriedout by the external auditor is considered the most suitable

measure of the non-audit services provided. These represented

0.1% of the total fees (FY23: 0.2%).

External auditor

effectiveness and quality

Scope

The Committee assesses the effectiveness of the external

auditprocess and the qualifications, expertise, resources,

independence and objectivity of the external auditor,

including the nature and extent of non-audit services

throughout the year,focusing on:

– the quality of the audit and the financial reporting

process, including how effective the external auditor is at

identifying and addressing matters that could

compromise the quality ofBT Group’s reporting

– the service of the external auditor and the relationships

with the Committee, key members of management and

the internalauditor

– whether the external auditor has demonstrated

professionalscepticism

– whether the external auditor has challenged

management’s assumptions where necessary.

Review process

The Committee reviewed the audit scope and plan at the

startofthe year, and received regular audit reports from the

external auditor. This enabled the Committee to assess the

quality of audit work. The Committee had the opportunity

to interact with the external auditor at meetings as well as to

observe the communication and interactions between the

external auditor with management and the internal auditor.

TheCommittee reviewed and monitored management’s

responsiveness to the external auditor’s requests for

informationand its findings and recommendations. The

Committee Chair also regularly met with the lead audit

partner.

During the year, a questionnaire was also completed by the

Committee members and management to gather their

perspectives on the effectiveness and quality of the external

auditor’s work.

Conclusion

In conclusion, the Committee agreed that:

– the audit contributed to the integrity of the group’s

financialreporting

– the relationship between KPMG and both the Committee

andmanagement continues to be effective

– KPMG demonstrated an appropriate degree of

professionalscepticism and deployed a team with the

requiredlevel of skill and expertise to enable an

effective audit

– the audit strategy and plan was appropriately scoped,

communicated and executed

– KPMG continues to be independent, and recommended to

theBoard that the reappointment of KPMG, as our external

auditor, be put to our shareholders for approval at the 2024

AGM (this was subsequently approved by the Board).

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103 Corporate governance report

We have continued to engage with scrutinising the culture and

behaviour of BT Group to ensure it remains focused on living up

to both the letter and spirit of the Commitments and governance

protocol, as well as to ensure consumer fairness principles are

considered and reflected in the delivery of key outcomes.

Isabel Hudson

Chair of the BT Compliance Committee

15 May 2024

Committee role

The Committee was responsible for:

– monitoring BT Group’s compliance with the letter and spirit

ofthe Commitments made as part of the 2017 Digital

Communications Review (DCR) with Ofcom

– assessing whether Openreach can act with appropriate

independence while BT Group is able to fulfil its parent company

duties

– overseeing consumer fairness matters and developing internal

fair pricing principles on behalf of the Board by monitoring

whether BT Group is living up to Ofcom’s Fairness for Customers

commitments

– reviewing how BT Group is delivering appropriate outcomes for

stakeholders across the Commitments and consumer fairness.

I will be stepping down from the Board in July, after serving for

nine years, and this will therefore be my last report as Chair of the

Committee. From 1 April 2024, the Committee’s responsibilities

transitioned to both the Audit & Risk and Responsible Business

Committees. The Audit & Risk Committee is now responsible for

overseeing compliance with the Commitments and the

Responsible Business Committee’s remit expanded to include

consumer fairness. Next year’s Annual Report will provide detail on

how this has been achieved in FY25.

Committee membership and attendance

During the year, the Committee met five times. The Committee

members are all Independent Non-Executive Directors. The

Deputy Company Secretary was secretary to the Committee, and

he, or his delegate, attended all meetings and provided guidance,

advice and support as required. The Chair of the Board, General

Counsel, Company Secretary & Director Regulatory Affairs,

Commitments Assurance Office Director (CAO), and Openreach’s

Commitments Monitoring Office Director also attended meetings

as invitees.

Meetings attended

Isabel Hudson (Chair) 5/5 Allison Kirkby

5/5

Ian Cheshire

1/1 Sara Weller 5/5

a Ian stepped down from the Board and this Committee at the conclusion of the 2023

AGM

b Allison attended all meetings during the year in her role as a Non-Executive Director

I reported to the Board after each meeting on the Committee’s

activities and the main issues discussed, with the Board receiving

copies of the Committee’s meeting papers and minutes. Ofcom

also received copies of the minutes. Details on how we engage

with Ofcom can be found on page 45.

Committee focus in FY24:

Compliance with the Commitments

The Committee’s monitoring activities focused on:

– the culture of adherence of BT Group’s leadership

totheCommitments

– stakeholder perceptions by engagement with industry

stakeholders, including CPs, Ofcom and Openreach

– the CAO’s reviews of the annual financial planning, strategy

development and commercial pricing and product processes

– targeted reviews of governance for programmes across

thegroup

– the outcomes of CAO compliance reviews, decisions on

potential Commitments breaches and, where appropriate,

remedial actions. Breaches continue to remain at a low level

– BT Group and Openreach’s progress on wider DCR outcomes.

Consumer fairness matters

The Committee allocated significant time during the year

toitsconsumer fairness remit, including:

– the transition to All IP and the migration of Digital Voice

(seepage 3)

– encouraging the formation of pricing principles for the EE brand

(see page 58)

– year-on-year consumer fairness trends (see page 41) as well

asoutputs from the group’s consumer fairness panel meetings.

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104 Corporate governance report

BT Compliance Committee Chair’s report

This year the Committee has overseen progress on our Manifesto

commitments and how they are being accelerated across the

business to maintain trust in BT Group.

Sara Weller

Chair of the Responsible Business Committee

15 May 2024

Committee role

The Committee is responsible on behalf of the Board for:

– agreeing the responsible business strategy for the group

– overseeing the continuation of our Manifesto including progress

against its goals and targets.

The Committee’s key responsibilities are set out in its terms

ofreference available at bt.com/governance

BT Group has continued to focus on how our actions as a

responsible business can most effectively support customers,

colleagues and businesses. Throughout the year the Committee

has overseen progress on our Manifesto and its delivery across

thebusiness, providing guidance and challenge to the plans.

In April 2023, the Committee name changed to the Responsible

Business Committee to reflect the full breadth of initiatives that

are discussed and reported in our Manifesto. With effect from

1April 2024, in light of the BT Compliance Committee being

disbanded, the Committee has responsibility for consumer

fairness. This includes monitoring the group’s adherence to the

consumer fairness principles. The BT Compliance Committee

Chair’s report can be found on page 104.

Committee membership and attendance

The Committee members are all Independent Non-Executive

Directors. The Deputy Company Secretary is secretary to the

Committee and he, or his delegate, attends all meetings and

provides guidance, advice and support as required.

The Chief Human Resources Officer, Corporate Affairs Director,

Sustainability & Corporate Affairs Strategy Director, Chief

Inclusion, Equity & Diversity Officer, CEO Consumer, CEO Business

and General Counsel, Corporate, Digital & Networks also attend

meetings as invitees.

During the year, the Committee held four scheduled meetings.

Meetings attended

Sara Weller (Chair) 4/4 Steven Guggenheimer 4/4

Maggie Chan Jones 4/4 Isabel Hudson 4/4

I report to the Board after each meeting on the Committee’s

activities and the main matters discussed, with the Board receiving

copies of the Committee’s meeting papers and minutes.

Details on the FY24 Board and Committee evaluation can be

found on page 94.

Committee focus in FY24

The Committee continued to monitor progress of our Manifesto

and priorities under the core pillars: responsible, inclusive and

sustainable. More information can be found on pages 34 to 39.

Responsible: new technology must earn trust and transform life

for the better. The Committee:

– provided challenge to explore how generative AI can be used to

build trust, support growth and reduce risk relating to its adoption

– reviewed the application of BT Group’s responsible tech

principles to help protect vulnerable groups such as children

– endorsed BT Group’s human rights policy.

Inclusive: the future of technology must be inclusive and diverse

for everyone to benefit. The Committee:

– discussed the importance of attracting and retaining diverse talent,

providing input to plans to create a more inclusive culture - aided by

the appointment of a Chief Inclusion, Equity & Diversity Officer

– oversaw progress on our digital skills goal and the launch of a

new partnership with AbilityNet to reach older and digitally-

excluded groups. More information on our digital skills goals can

be found on page 35.

Sustainable: technology must accelerate our journey to net zero

emissions and a circular world. The Committee:

– reviewed progress on sustainability goals including those

forming part of the Restricted Share Plan underpin – see

page109

– oversaw plans to reduce the operational emissions including

risks relating to energy and an update from Openreach on

electric vehicles

– discussed sustainability plans in Consumer, Business and

Openreach, including the shift towards a more circular world

– explored progress on the carbon abatement methodology

andhow this supports customers to cut carbon emissions, with

achallenge to make sure the methodology used was robust

andtransparent.

Regulatory reporting

The Committee considered the rapidly evolving regulatory

landscape and the impact new reporting requirements will have

onthe group including impacts on resourcing given the increase

inthe scope and scale of reporting. The Committee oversaw the

preparation for these requirements and the opportunity for this to

be used to drive greater consistency, accuracy and transparency.

Stakeholder engagement

The Committee considered the interests and views of key

stakeholders and how these are reflected in the group’s approach

to responsible business. The Committee will continue to focus on

engaging with stakeholders in the future, especially given changes

in the regulatory reporting landscape.

BT Sourced

The Committee assessed how environmental risks and human

rights due diligence is being managed across the supply chain,

including steps taken to positively influence suppliers’ contribution

to environmental and social goals.

Priorities for FY25

In the year ahead, in addition to its oversight of our Manifesto,

theCommittee will focus on:

– integration of, and progress on, the consumer fairness agenda

– progress in responding to new regulatory ESG reporting

requirements.

BT Group plc Annual Report 2024

105 Corporate governance report

Responsible Business Committee Chair’s report

As well as the usual annual decisions, a key task for the

Committee this year was handling the change in Chief Executive

and ensuring our approach took account of all relevant angles to

support the ongoing success of the business. We also remained

acutely aware of the cost pressures many of our colleagues face.

Ruth Cairnie

Chair of the Remuneration Committee

15 May 2024

Contents

Committee Chair’s letter

Review of the year; Committee decisions; key outturns and

plans for the year ahead – pages 106 to 109.

Focus on remuneration

The key aspects of our remuneration structure, outcomes for

FY24 and implementation of the shareholder approved

Directors’ Remuneration Policy (Policy) in FY25 – pages 110

to 112.

Annual remuneration report

More detail on how we implemented the Policy during FY24

including the single figure table of remuneration for each

director – pages 113 to 121.

Remuneration in context

How we take account of remuneration conditions across the

group and the environment in which the Committee makes it

decisions on executive pay – pages 122 to 124.

Committee membership and attendance

The Committee members are all Independent Non-Executive

Directors. The Deputy Company Secretary is secretary to the

Committee and he, or his delegate, attends all meetings and

provides guidance, advice and support as required.

The Chairman, Chief Executive, Chief Human Resources Officer,

Director of Group Reward and the Executive Remuneration &

Policy Director are typically invited to attend meetings. They are

not present when their own remuneration is discussed or in other

circumstances where their attendance would not be appropriate.

Deloitte LLP, as the independent remuneration adviser to the

Committee, also attends meetings.

The Committee held five scheduled meetings during the year and

one ad hoc meeting. After each meeting, I reported back to the

Board on the Committee’s activities and the main issues discussed.

Meetings attended

Ruth Cairnie (Chair)

4/4 Isabel Hudson

4/5

Ian Cheshire

2/2 Matthew Key 5/5

Iain Conn

2/2

a Ruth joined the Board and the Committee on 6 April 2023.

b Ian and Iain stepped down from the Board and the Committee at the conclusion of the

AGM on 13 July 2023.

c Isabel sent apologies for one meeting due to a personal matter and provided

comments on the papers to the Committee Chair in advance.

Tushar Morzaria joined the Board and the Committee on 7 May

2024.

Committee role

The Committee is responsible on behalf of the Board for:

– Determining the salary and benefits for the Chairman, Executive

Directors, members of the Executive Committee and the

Company Secretary, and monitoring remuneration practices

and policies for the wider workforce

– Setting the performance targets for the annual bonus scheme

for senior executives for the year ahead

– Determining awards under the annual bonus scheme and the

group’s long-term incentive plans for senior executives

– Reviewing and approving the Report on directors’ remuneration

– Reviewing and approving the Policy including seeking shareholder

approval, on a binding basis, at least every three years

– Ensuring that all remuneration decisions are made within the

parameters of the approved Policy and align with our reward

philosophy and our values. No senior executive is involved in any

decision about their own remuneration.

The Committee’s key responsibilities are set out in its terms of

reference available at bt.com/governance

BT Group plc Annual Report 2024

106 Corporate governance report

Report on directors’ remuneration

On behalf of the Committee I’d like to start by thanking Sir Ian

Cheshire, the former Committee Chair, for a smooth handover and

for securing shareholder support for our Policy at the 2023 Annual

General Meeting (AGM). I intend to continue the work of the

Committee by supporting our new Chief Executive and the

executive team in realising the group’s long term strategic goals.

This report sets out information on the Committee’s activities

during the year, our remuneration framework and its

implementation. I’ve also provided further context on the

performance of the business throughout the year and the

environment in which the Committee made decisions on

executivepay.

Stakeholder context

Wider workforce pay and conditions

As reported last year, we accelerated part of our 2023 pay review

and delivered a £1,500 pay rise in January 2023 to support 85% of

our UK colleagues (all of those earning a £50,000 full-time

equivalent salary or below) during the cost-of-living crisis. This

cohort received a further salary increase of at least 2.5% in

September 2023, while a 5.5% budget was set for all other

colleagues who had received no increase in January. Combined,

therefore, all UK colleagues received at least 5.5% in 2023,

withour frontline colleagues receiving up to 10% and an

averageof 7.2%.

Further, as part of the September pay review, we also secured

agreement with our unions for the 2024 review, bringing welcome

certainty to both colleagues and the business. All UK frontline

colleagues received a 4% increase in April 2024, while a 4%

budget was available for our UK management population in

June2024.

Although inflation has fallen in recent months, the Committee

understands that our colleagues continue to face cost pressures

and it receives regular updates on pay and conditions across the

business throughout the year. Isabel Hudson, as the Designated

Non-Executive Director for Workforce Engagement, fed back any

comments and sentiments on remuneration matters raised by the

Colleague Board during the year. Maggie Chan Jones took on this

responsibility during the year and the Committee will consult with

Maggie to ensure these issues continue to be front-of-mind as it

makes decisions on executive pay.

In 2022 we voluntarily committed to paying all our UK colleagues

at least in line with the Real Living Wage and continue to do so.

This year, we expanded our commitment to pay a fair living wage

to direct employees in all countries in which we operate, in

compliance with the Ethical Trading Initiative’s Base Code #5.1.

We’re confident that we meet minimum wage requirements in all

countries in which we operate. Almost 85% of our management

colleagues are currently paid within or above their competitive

market range, and we’ll continue to focus on improving

competitive pay positioning as part of our annual pay cycle.

Customer context

We accentuated our focus this year on our customers during

challenging economic times, and achieved particularly strong

NPSresults in our Business and Openreach divisions. Customer

experience remains a core pillar of our strategy, and a key part

ofour annual bonus scorecard for the coming financial year.

Shareholder context

Our share price performance over FY24 reflects the continued

volatility in the wider market as well as the scale of the long term

investment that we’re undertaking. However, we remain confident

in our longer term strategy and continue to deliver against it. We

again paid dividends in FY24 and believe that we’veappointed the

right Chief Executive to realise our vision for BT Group, bringing

longer term benefits for our shareholders.

Salary

2023 salary review

As outlined above, our annual salary review for senior

management took place in September rather than June. Simon

Lowth received a base salary increase of 5.5% in line with the

minimum increase for UK senior management colleagues. As

disclosed previously, Philip Jansen waived his right to any increase

in his base salary which had been fixed for five years following his

appointment.

2024 salary review

This year the annual salary review moves back to its usual effective

date in June. UK managers are receiving an average 4% increase

in salary, with an expected 2% minimum increase granted across

the vast majority of our UK management population. There has

been a particular focus on data-driven decision making, to target

higher increases on those whose pay is less competitive versus

market comparators. In line with this approach, Simon will receive

a 2% increase in base salary.

Allison Kirkby’s salary was set at £1,100,000 on appointment in

February. No annual salary increase was awarded for 2024.

BT Group plc Annual Report 2024

107 Corporate governance report

Report on directors’ remuneration continued

Annual bonus

FY24 annual bonus outcomes

For FY24, annual bonus performance was based on a scorecard of

five key financial and non-financial measures that align to our

strategic priorities. Financial performance accounted for 70% of

the bonus scorecard and comprised the following measures:

– Adjusted EBITDA (35%) – despite ongoing macroeconomic

challenges, we exceeded our target for the year and delivered

£8.1bn in EBITDA.

– Normalised free cash flow (35%) – management of free cash

flow was strong in-year, and we delivered NFCF of £1.28bn,

above target and our guidance for the year.

Our non-financial measures accounted for 30% of the bonus

scorecard and comprised the following measures:

– Customer (20%) – this year saw increased NPS scores,

particularly in Business and Openreach. After a disappointing

previous year, we made up ground during FY24 in a difficult

environment, exceeding target in three of four quarters, and

stretch in two of four. Across the full year, performance was

between target and stretch.

– Inclusion, equity and diversity (10%):

– Representation in senior management team (5%) – we’ve

set ambitious and stretching diverse representation targets

across BT Group, and this metric measures progress towards

meeting them. Although we made significant progress in

disability representation, and some improvement in

representation of black and black heritage colleagues, we

failed to meet our targets on gender. Overall, therefore, the

outcome was between threshold and target for the year.

– Inclusion index (5%) – defined as the average score across

four key inclusion questions in our employee engagement

surveys, this measure aimed to close the gap in inclusion

sentiment for key under-represented groups. Unfortunately,

the average gap in inclusion index score across these four

groups increased from 4.6% to 5.9%, which did not meet our

threshold target.

More information on the actions we are taking on inclusion, equity

and diversity can be found on pages 31 to 32. Further detail on the

FY24 annual bonus scorecard outcomes can be found on page

114.

The overall formulaic outcome of the bonus scorecard was 129.2%

of target. The Committee considered this result in the context of

the wider performance of the business, the pace of our

transformation to date, and the experience of our shareholders,

and exercised its discretion to reduce the bonus payout to 110%

oftarget.

Philip and Simon will therefore be awarded bonuses of £1,452,000

and £1,044,655 respectively. Half of Simon’s bonus will be

deferred into shares for three years.

FY25 annual bonus scorecard

The Committee has agreed that the current bonus scorecard

remains aligned with our strategic priorities for the year, and

accordingly no changes are proposed to the measures and

weightings, other than minor tweaks in how inclusion and diversity

are measured to ensure they remain fit for purpose.

The annual bonus plan remains subject to a health and safety

underpin and, if triggered, the Committee retains the discretion to

reduce the payout as it considers appropriate, including to nil.

No changes are proposed to bonus opportunities: on-target and

maximum will remain at 120% and 200% of salary for both Allison

and Simon, with 50% deferred into shares for a period of three

years.

Long term incentives

Vesting of 2021 Restricted Share Plan awards

The Committee carried out an assessment of the two underpins

applying to the 2021 Restricted Share Plan (RSP) awards (relating

to ROCE performance and ESG/reputational damage) and

determined that neither were triggered.

The Committee also assessed whether there was any evidence of

windfall gains at the point of grant or vesting of these awards and

concluded there was not. The Committee therefore agreed that

the expected vesting value is appropriate.

All three tranches of the 2021 RSP awards will therefore vest in full

in June 2024, 2025 and 2026 respectively. Tranches one and two

remain subject to a holding requirement until June 2026.

Grant of 2023 RSP awards

The grant of our 2023 RSP awards was delayed from June until

September in line with the annual salary review. Simon received an

award at the normal Policy opportunity of 200% of salary, whilst

Philip did not receive an award in light of him stepping down from

the Board. Allison received an award upon appointment in

February, granted at the normal opportunity and pro-rated to

reflect that she joined part-way through the vesting period. All

awards will be subject to both ROCE and sustainability underpins,

details of which can be found on page 115.

The Committee considered the level of awards, mindful that the

share price at the time of award was lower than at the time of the

2022 RSP award.

As set out elsewhere in this report, the group is undergoing

significant change as the Board-approved plan to transform and

grow the business is executed. In order to build the UK’s leading

networks and deliver for our customers, significant and ongoing

long term investment is required. The Committee considers that

the current share price reflects the position of the group in this

strategic journey and that future share price increases will be as a

result of management taking the right actions and consistently

executing our strategy over the next three to five years, rather

than as a result of a more general market recovery or windfall gain.

The Committee therefore decided not to make any adjustment to

the award level, but to review the value of the 2023 RSP awards at

the time of vesting and use its discretion to adjust the outcome at

that point, should it deem this to be appropriate.

BT Group plc Annual Report 2024

108 Corporate governance report

Report on directors’ remuneration continued

Grant of 2024 RSP awards

Both Allison and Simon will be granted an award of 200% of salary

in June. As in prior years, these awards will vest in three equal

tranches in June 2027, 2028 and 2029, with all tranches subject to

a holding requirement until June 2029.

RSP awards will be subject to the same two underpins as the 2023

awards, measured over the initial three-year vesting period:

1. ROCE – average return on capital employed must be at

least7%

2. Sustainability – the business must have made sufficient

progress over the vesting period towards meeting our

sustainability commitments (this could include carbon

emissions, carbon abatement and circularity).

Executive Director changes

Departure of Philip Jansen

Last July we announced Philip’s intention to step down from the

Board once a suitable successor had been identified. He stepped

down as Chief Executive on 31 January 2024, and remains an

employee of the group until 30 June 2024 during which time he

will make himself available to Allison Kirkby on request to ensure

an orderly and effective handover. He will continue to receive his

contractual salary and benefits until this date.

In line with the Policy and the treatment of prior leavers, and in

light of the fact that he has retired from executive life, the

Committee elected to treat Philip as a good leaver. As a result, he

will be eligible to receive a full-year bonus in respect of FY24,

which will be paid in full in June 2024. Given his retirement, no

deferral will apply, with the full bonus paid in June 2024.

Philip did not receive an RSP award in September 2023 as he had

already announced his decision to step down. Outstanding shares

under the RSP will be preserved, pro-rated for service, and will

vest according to their normal schedule (subject to satisfaction of

the relevant underpins). Outstanding shares under the Deferred

Bonus Plan (DBP) will be retained fully and vest according to their

usual timeframe.

Philip will also be required to maintain a minimum shareholding

equivalent to 500% of his annual salary for two years post

cessation of employment.

Appointment of Allison Kirkby

Allison transitioned from her role as a Non-Executive Director to

Chief Executive on 1 February 2024. Allison will receive the same

remuneration package as her predecessor, which is within the

parameters of the Policy and aligned to the market for

comparators of BT Group’s size and complexity.

This includes an annual salary of £1,100,000, and on-target bonus

opportunity of 120% of salary, with 50% of any bonus deferred

into shares for a three-year period. Allison will also receive an

annual RSP grant worth 200% of salary, and an award in respect of

FY24 was granted in February pro-rated to reflect that she joined

part-way through the vesting period. Subject to the satisfaction of

the relevant underpins, the RSP awards will vest in three tranches

after three to five years and be subject to a holding period until

year five.

Full details of Allison’s remuneration package can be found in the

section outlining the planned implementation of the Policy for

FY25 on page 112.

Chairman and Non-Executive Director (NED) fees

In line with the wider workforce increase and that offered to

Simon, the NED base fee will increase from 1 June by 2%, the first

increase in two years. For simplicity, the fee payable for

membership of the Nominations Committee (which all NEDs

receive) has been consolidated into the base fee. As Chairman,

Adam Crozier waived his right to receive any increase.

Noting the changes to the structure and responsibility of our

Board Committees that have been made this year, a full review of

our Committee and additional responsibility fees was undertaken,

to ensure they remain appropriate and market-competitive. These

fees have not been increased since 2019, and accordingly the

following was agreed:

– An increase from £14,000 to £25,000 for the Chair of the

Responsible Business Committee, and an increase from £8,000

to £15,000 for members of said Committee

– An increase from £10,000 to £17,000 for the Designated Non-

Executive Director for Workforce Engagement.

As always, the Committee and I wish to maintain an open dialogue

on remuneration matters with our investors and I would welcome

their comments or feedback, and support, at the forthcoming

AGM.

Ruth Cairnie

Chair of the Remuneration Committee

15 May 2024

BT Group plc Annual Report 2024

109 Corporate governance report

a ROCE is defined on page 48.

Our remuneration principles are to maintain a competitive

remuneration package that promotes the long term success of the

business, avoids excessive or inappropriate risk-taking and aligns

management’s interests with those of shareholders.

Below is how remuneration is aligned with the principles of the Code.

Clarity

– Our remuneration framework is structured to support the

financial and strategic objectives of the group, aligning

theinterests of our Executive Directors with those of

ourshareholders

– We’re committed to transparent communication with all

stakeholders, including our shareholders

– The same annual performance framework applies to all our

management colleagues, including Executive Directors, with

aligned group and divisional metrics to ensure a consistent

focus.

Risk

– Our incentives are structured to align with the group’s risk

management framework

– Three-year deferral under the annual bonus and a five-year

release period on RSP awards create long term alignment, as

doour in- and post-employment shareholding requirements

– The annual bonus, deferred bonus and RSP also incorporate

malus and clawback provisions, and there is overarching

Remuneration Committee discretion to adjust formulaic

outcomes.

Predictability

– The long-term RSP reflects that we operate in a tightly

regulated environment, ensuring a narrower but more

predictable range of reward and performance outcomes

toalignwith our business model.

Proportionality

– There is clear alignment between group performance, strategic

progress, and remuneration outcomes for our Executive

Directors

– Target total compensation levels are set competitively

compared to other companies of similar size and complexity to

ensure we can attract and retain the executives needed to

deliver the business strategy

– Maximum total compensation levels are typically set lower than

typical market practice to reflect the narrower and more

predictable range of performance outcomes for BT Group

– Formulaic incentive outcomes are reviewed by the

Remuneration Committee and may be adjusted after

considering overall group performance and wider workforce

remuneration policies and practices.

Simplicity

– We operate a simple but effective remuneration framework

which is applied on a consistent basis for all colleagues

– The annual bonus rewards performance against key

performance indicators, while the RSP provides long term

sustainable alignment with our shareholders

– There is clear line of sight for management and shareholders.

Alignment to culture

– When considering performance, the Remuneration Committee

takes account of BT Group’s values

– The Remuneration Committee receives regular updates on

remuneration practices and policies for the wider workforce,

and colleagues may provide feedback to the Board via the

Colleague Board and the Designated Non-Executive Director

for Workforce Engagement

– Colleagues are encouraged to become shareholders in the

business through the operation of all-employee share plans.

BT Group plc Annual Report 2024

110 Corporate governance report

Focus on

remuneration

Remuneration earned in FY24

Fixed pay Variable pay

£000

Allison Kirkby

Chief Executive

Philip Jansen

Former Chief Executive

Simon Lowth

Chief Financial Officer

Allison Kirkby

Philip Jansen Simon Lowth

a Allison was appointed as Chief Executive from

1 February 2024. The FY24 base salary figure

reflects Allison’s total remuneration for the year

representing £105,000 received as an

Independent Non-Executive Director and

£183,000 received as Chief Executive. Allison was

not eligible for a bonus in FY24 and her first RSP

award was granted in February 2024.

b In line with the Policy, 50% of the annual bonus is

deferred into shares for three years. Philip’s FY24

bonus will be paid fully in cash, with no deferral

into shares.

c Both underpins have been satisfied for the 2021

RSP award and therefore all three tranches of the

2021 RSP award will vest in full in June 2024,

2025 and 2026 respectively. In addition, the

second tranche of the 2020 RSP will vest in

August 2024. Further detail is set out on page

114.

d The total variable pay for FY23 for Philip and FY24

for Simon do not balance due to roundings.

£000 FY24 FY23 FY24 FY23 FY24 FY23

Base salary 288 n/a 917 1,100 774 748

Pension allowance 18 n/a 92 110 77 75

Benefits 35 n/a 107 113 24 23

Total fixed pay 341 n/a 1,116 1,323 875 846

Annual bonus (shares)

n/a n/a n/a 481 522 328

Annual bonus (cash) n/a n/a 1,452 481 522 328

RSP (shares)

n/a n/a 1,151 670 770 448

Total variable pay

0 n/a 2,603 1,633 1,815 1,104

Total 341 n/a 3,719 2,956 2,690 1,950

Performance outcomes in FY24

Annual bonus FY24

Measure and weighting (%) Payout (% of max)

– Bonus was subject to five measures of

financial and non-financial performance

– Both financial metrics and NPS were above

target for the year

– Our SMT representation metric finished the

year below target while our inclusion index

result missed threshold

– This resulted in a formulaic outcome of

129.2% of target. However, the Committee

exercised its discretion to reduce the overall

scorecard payout to 110% of target

– In line with the Policy, 50% of Simon’s

annual bonus will be deferred into shares

for three years.

Adjusted EBITDA (35%)

80%

Normalised free cash flow (35%)

92%

Group Net Promoter Score (NPS) (20%)

73%

SMT representation (5%)

53%

Inclusion index (5%)

2021 RSP

– A conditional share award subject to two underpins over the initial three-year vesting period.

– The Committee assessed the two underpins at the end of the restricted period and confirmed that both had been satisfied.

– Accordingly, all three tranches of the 2021 RSP award will vest in full in June 2024, 2025 and 2026 respectively. Tranches one and

two are subject to a holding period until June 2026. Further detail is set out on page 114.

BT Group plc Annual Report 2024

111 Corporate governance report

Implementation of the Policy in FY25

Fixed pay Annual bonus RSP

Allison Kirkby

Chief Executive

Salary – £1,100,000

Benefits

Pension allowance –

10% of salary

Maximum opportunity –

200% of salary

Target opportunity –

120% of salary

2024 award – 200% of salary

Simon Lowth

Chief Financial Officer

Salary – £791,405

Benefits

Pension allowance –

10% of salary

Maximum opportunity –

200% of salary

Target opportunity –

120% of salary

2024 award – 200% of salary

Performance

measures

n/a – Adjusted EBITDA (35%)

– Normalised free cash flow (35%)

– NPS (20%)

– Diversity and inclusion (10%).

An underpin applies which allows the

Committee to exercise its discretion

to reduce the scorecard result if

there is a significant breach in health

and safety.

Awards subject to two underpins over

the initial three-year vesting period:

– Average ROCE must be at least 7%

– Sufficient progress is made towards

meeting our sustainability

commitments.

Framework n/a – 50% of any bonus payment for

FY25 will be deferred into shares

for three years

– Malus and clawback provisions

apply

– Full Committee discretion

available.

– Awards vest in three equal tranches

after three, four and five years; no

shares can be sold until year five

– Malus and clawback provisions

apply

– Full Committee discretion

available.

Directors’ Remuneration Policy (Policy)

The Policy as approved by shareholders at the AGM on 13 July 2023 in accordance with section 439A of the Companies Act 2006

can be found online at bt.com/annualreport

BT Group plc Annual Report 2024

112 Corporate governance report

Focus on remuneration continued

This section summarises all elements of the directors’ remuneration in FY24. References to ‘audited’

refer to an audit performed in accordance with UK statutory reporting requirements.

Single total figure of remuneration (audited)

The following table sets out all emoluments received by directors for FY24 and FY23.

Fixed pay Variable pay

Basic salary

andfees

£000

Benefits

£000

Pension

£000

Total

fixed pay

£000

Annual bonus

£000

Long term

incentives

£000

Total

variable pay

£000

Total

£000

FY24 FY23 FY24 FY23 FY24 FY23 FY24 FY23 FY24 FY23 FY24

FY23

FY24 FY23 FY24 FY23

Chairman

Adam Crozier 700 700 11 12 711 712 711 712

Executive Directors

Allison Kirkby

f,i

288 125 35 8 18 341 133 341 133

Simon Lowth 774 748 24 23 77 75 875 846 1,045 656 770 448 1,815 1,104 2,690 1,950

Non-Executive directors

Ruth Cairnie

161 161 161

Maggie Chan

Jones

h,i

99 8 35 134 8 134 8

Steven

Guggenheimer

h,i

97 48 36 15 133 63 133 63

Isabel Hudson

147 146 2 1 149 147 149 147

Matthew Key

163 150 2 1 165 151 165 151

Raphael Kűbler

0 0 0

Sara Weller

140 138 140 138 140 138

Sub-total 2,569 2,063 145 60 95 75 2,809 2,198 1,045 656 770 448 1,815 1,104 4,624 3,302

Directors who left during the

year

Philip Jansen

917 1,100 107 113 92 110 1,116 1,323 1,452 963 1,151 670 2,603 1,633 3,719 2,956

Adel Al-Saleh

0 0 0 0 0

Ian Cheshire

44 155 44 155 44 155

Iain Conn

47 163 47 163 47 163

Total 3,577 3,481 252 173 187 185 4,016 3,839 2,497 1,619 1,921 1,118 4,418 2,737 8,434 6,576

a Benefits are provided in line with the Policy. For Allison, the figure includes one-off relocation costs to the value of £25,000. For Philip, the figure includes a company provided car

and personal driver to the value of c. £79,000 (FY23: £86,000).

b Pension allowance paid in cash for the financial year – see ‘Pension allowance’ on page 114.

c Annual bonus shown includes both the cash and deferred share element for Simon. The deferred element of the FY24 bonus includes the value of deferred shares to be granted in

June 2024. Further details of the deferred element are set on page 122. Allison will not receive a bonus in respect of FY24. Philip’s FY24 bonus will be paid fully in cash, with no

deferral into shares.

d Value shown represents the estimated value of the second tranche of the RSP awards granted in 2020 and the first tranche of the RSP awards granted in 2021, that will vest in

August and June 2024 respectively. The estimated value is based on a three-month average share price from 1 January 2024 to 31 March 2024 of 110.46p. Further details are

provided on page 118. For the 2021 award, none of the value was attributable to share price appreciation over the vesting period. The Committee did not exercise any discretion in

relation to the vesting of the awards or share price change.

e The first tranche of the 2020 RSP vested in August 2023. The 2020 RSP value reported last year (£803,000 for Philip and £537,000 for Simon) was calculated on an estimated basis

using the three-month average share price from 1 January 2023 to 31 March 2023 of 135.88p. The figures have been restated to reflect the actual share price on vesting of

113.43p. Further details are provided on page 118.

f Allison was appointed as a Director in March 2019 and became Chief Executive on 1 February 2024. The figure reflects Allison’s total remuneration for the year representing

£105,000 received as an Independent Non-Executive Director and £183,000 received as Chief Executive.

g Ruth was appointed as a Director on 6 April 2023 and the figure represents her pro-rated remuneration during the year.

h Includes an additional fee for regular intercontinental travel to attend Board and Board Committee meetings in line with the Policy.

i Value shown relates to reimbursement of reasonable travelling and other expenses (including any relevant tax) incurred in carrying out their duties.

j Raphael was appointed as a Director on 30 January 2024. Under the terms of the Relationship Agreement between BT Group and Deutsche Telekom and Raphael’s letter of

appointment, no remuneration is payable for this position.

k Philip stepped down as a Director and Chief Executive on 31 January 2024 and the figure represents his pro-rated remuneration during the year.

l Adel stepped down as a Director on 31 December 2023. Under the terms of the Relationship Agreement between BT Group and Deutsche Telekom and Adel’s letter of

appointment, no remuneration is payable for this position.

m Ian and Iain stepped down as Directors at the conclusion of the AGM on13 July 2023 and the figure represents their pro-rated remuneration during the year.

BT Group plc Annual Report 2024

113 Corporate governance report

Annual

remuneration report

Additional disclosures relating to the single figure table (audited)

Salaries and fees

Executive Directors’ salaries are reviewed annually, with any increases typically effective from 1 June. A 5.5% increase to Simon Lowth’s

salary was agreed from 1 September 2023 in line with increases for our UK senior management team, bringing Simon’s salary to

£791,405. Philip’s salary of £1,100,000 was fixed for five years at the time of his appointment in January 2019. Allison was appointed as

Chief Executive on 1 January 2024 and the Committee agreed a salary of £1,100,000.

Adam’s annual fee has been £700,000 since his appointment as Chairman on 1 December 2021. His fee has remained at this level

throughout the year as the Chairman volunteered to waive any fee increase during FY24.

The fees for Non-Executive Directors reflect Committee-related or other additional responsibilities, including on a pro-rated basis for

any appointments during the year. A full breakdown of Non-Executive Director fees is set out on page 119.

Pension allowance

Executive Directors receive an annual cash allowance, which can be put towards the provision of retirement benefits.

All Executive Directors received an annual allowance of 10% of salary. This is aligned with the contribution rate available to the majority of

our UK employees. We also provide death in service cover consisting of a lump sum equal to four times salary, and for Simon Lowth only, a

dependants’ pension equal to 30% of his capped salary.

Annual bonus

Philip and Simon were eligible for an on-target bonus in respect of FY24 of 120% of salary with a maximum opportunity of 200% of salary.

Having joined as Chief Executive on 1 February 2024 and in accordance with the bonus plan rules, Allison was not entitled to a bonus for

FY24. The annual bonus is based on performance against a scorecard of five key financial and non-financial measures linked to our KPIs

as set out on pages 48 to 49.

Category Measure Weighting Threshold Target Stretch Actual

Payout (% of max)

Financial Adjusted EBITDA (£m) 35% 7,959 8,075 8,191 8,100 80%

Normalised free cash flow (£m) 35% 1,072 1,188 1,304 1,280 92%

Transformation

scorecard

Group NPS 20% 0 100 200 132 73%

SMT representation (%) 5% 76.9 84.6 92.3 82.8 53%

Inclusion index 5% 3.5% 2.3% 1.1% 6.0% 0%

Formulaic outcome 77.3% of max (129.2% of target)

For scorecard purposes, the EBITDA result assumes an on-target bonus payout for all colleagues. Actual post-bonus EBITDA for FY24 is

£8,100m.

When determining the overall performance and bonus pay-outs, the Committee also considers a number of other factors including the

wider performance of the business, share price performance, the external environment and overall affordability. Despite the formulaic

outcome of the final bonus scorecard being 129.2% of target, the Committee exercised its discretion to reduce the outcome to 110% of

target. The Committee believes this is a fair reflection of the overall performance of the business.

The final bonus outturns for Philip and Simon are set out in the table below:

Formulaic outcome Following discretion % of max Value

Philip Jansen 129.2% of target 110% of target 65.9% £1,452,000

Simon Lowth 129.2% of target 110% of target 65.9% £1,044,655

2021 RSP

The RSP is a conditional share award. Two underpins applied over the initial three-year vesting period:

– ROCE is equal to or exceeds the WACC over the same period

– there must have been no ESG issues which have resulted in material reputational damage for the group.

The Committee assessed performance against the two underpins at the end of the financial year and agreed that both had been satisfied.

As a result, all three tranches of the 2021 RSP award will vest in full in June 2024, 2025 and 2026 respectively. Tranches one and two

remain subject to a holding requirement until June 2026.

BT Group plc Annual Report 2024

114 Corporate governance report

Annual remuneration report continued

Awards granted during the year (audited)

2023 RSP

The 2023 RSP awards were made in September 2023 as set out below and on page 118. An RSP award was made to Simon Lowth in line

with the normal Policy level. Despite serving as Chief Executive for almost a year of the performance period, no award was made to Philip

Jansen on the basis of him stepping down as Chief Executive at the end of January 2024.

To reflect her joining part-way through the initial three-year vesting period, a pro-rated award was made to Allison Kirkby.

Director Date of award

RSP award

(shares)

Grant price

% of salary

Face value

of award

Allison Kirkby 8 February 2024 1,484,942 107.00p 144 £1,588,889

Simon Lowth 7 September 2023 1,388,429 114.00p 200 £1,582,809

a The grant price is calculated using the average middle-market price of a BT Group plc share for the three dealing days prior to grant.

These awards are conditional share awards. Two underpins apply over the initial three-year vesting period:

– average ROCE must be at least 7%

– the business must have made sufficient progress over the vesting period towards meeting our sustainability commitments (which could

include carbon emissions, carbon abatement and circularity).

Should one or both underpins not be met, the Committee may at its discretion reduce the number of shares vesting, including to nil.

Awards will vest in three equal tranches after three, four and five years, with an additional holding period such that no shares may be sold

until year five. At vesting, additional shares representing the value of reinvested dividends on the underlying shares are added.

Malus and clawback provisions apply as set out in the Policy, and the Committee retains the ultimate discretion to adjust vesting levels to

ensure alignment with our overall performance.

Details of all interests under the RSP are set out on page 118.

2023 deferred shares

In line with the Policy, 50% of the bonus awarded for FY23 was deferred into shares. The awards were made under the deferred bonus

plan (DBP) in June 2023 as set out below and on page 118.

Director Date of award

DBP award

(shares)

Grant price

Face value of

award

Philip Jansen 15 June 2023 343,782 140.00p £481,294

Simon Lowth 15 June 2023 234,442 140.00p £328,218

a The grant price is calculated using the average middle-market price of a BT Group plc share for the three dealing days prior to grant.

Deferred shares are not subject to performance conditions and have a three-year vesting period. At vesting, additional shares

representing the value of reinvested dividends on the underlying shares are added.

Malus and clawback provisions apply as set out in the Policy, and the Committee retains the ultimate discretion to adjust vesting levels to

ensure alignment with our overall performance.

Details of all interests under the DBP are set out on page 118.

Joining arrangements for Allison Kirkby

Allison transitioned from her role as a Non-Executive Director to Chief Executive on 1 February 2024. Allison will receive the same

remuneration package as her predecessor, which is within the parameters of the Policy and aligned to the market for comparators of

BT Group’s size and complexity.

This includes an annual salary of £1,100,000, and on-target bonus opportunity of 120% of salary, with 50% of any bonus deferred into

shares for a three-years. Allison was not eligible to receive a bonus in respect of FY24. Allison’s RSP opportunity under the Policy will be

200% of salary. As outlined above, Allison was granted an RSP award in respect of FY24 in February 2024 pro-rated to reflect that she

joined part-way through the initial three-year vesting period. Subject to the satisfaction of relevant underpins, RSP awards will vest in

three equal tranches after three, four and five years and be subject to a further two-year holding period.

Allison will be subject to our shareholding requirement, being expected to build up a shareholding of 500% of salary within five years of

the date of her appointment. This requirement continues to apply for two years post-cessation.

BT Group plc Annual Report 2024

115 Corporate governance report

Philip Jansen leaving arrangements (audited)

Philip Jansen stood down as a director on 31 January 2024 but remains an employee of the group until 30 June 2024 continuing to

support an orderly and effective handover to Allison Kirkby as required. Under the terms of his service contract, he will continue to receive

his salary and contractual benefits until the end of his notice period, being 30 June 2024. These payments will total £458,333 basic salary

and fees, £8,888 benefits and £45,883 pension allowance. For FY24 this amounts to £183,333 basic salary and fees, £3,555 benefits and

£18,333 pension allowance. For FY25 this amounts to £275,000 basic salary and fees, £5,333 benefits and £27,500 pension allowance.

Philip will receive no compensation or payment for the termination of his service contract or his ceasing to be a director of BT Group or

any other group company, although BT Group will pay independent adviser fees of £45,000 (paid directly to the adviser) and £100 for

reconfirmation of customary post-employment restrictions on working for competitors.

In line with the Policy and the treatment of prior leavers, and in light of the fact that he has retired from executive life, the Committee

elected to treat Philip as a good leaver. As a result, he will be eligible to receive a full-year bonus in respect of FY24, which will be paid in

full in June 2024. Philip will not be eligible for an annual bonus in FY25.

Philip did not receive an RSP award in September 2023 as he had already announced his decision to step down. Outstanding shares under

the RSP will be preserved, pro-rated for service, and will vest according to their normal schedule (subject to satisfaction of the relevant

underpins). Outstanding shares under the DBP will be retained fully and vest according to their usual timeframe.

Philip will also be required to maintain a minimum shareholding equivalent to 500% of his annual salary for two years post cessation of

employment.

Former directors (audited)

No payments were made to former directors during the year.

Directors’ share ownership (audited)

The Committee believes that the interests of the Executive Directors should be closely aligned with those of shareholders. The aim is to

encourage the build-up of a meaningful shareholding in BT Group plc over time by retaining net shares received through the executive

share plans or from market purchases.

The shareholding requirement for Executive Directors under the Policy is 500% of salary. Executive Directors are expected to meet this

requirement within five years of the approval of the Policy or, in the case of any new Executive Directors appointed, within five years of

their date of appointment.

The shareholding requirement continues to apply in full for two years post-cessation of employment (or the total number of shares held

at cessation, if lower). The post-cessation shareholding requirement will be calculated and expressed as a fixed number of shares by

reference to the closing BT Group plc share price on the day immediately prior to the cessation date. The requirement is fixed as this

number of shares for a period of two years and compliance will be measured at cessation and annually thereafter. In enforcing continued

compliance post-cessation, the Committee may request that the Executive Director transfers any shares subject to the shareholding

requirement to be held in trust until they no longer need to be retained.

We encourage the Chairman and Independent Non-Executive Directors to purchase, on a voluntary basis, BT Group plc shares with an

aggregate value of £5,000 on average each year (based on acquisition price) to further align the interests of Non-Executive Directors

with those of our shareholders. They are asked to hold these shares until they cease being a member of the Board.

This does not apply to the Deutsche Telekom nominated representative director appointed to the Board as a Non-Independent, Non-

Executive Director under the terms of the EE acquisition in January 2016. This helps avoid any conflict of interest.

BT Group plc Annual Report 2024

116 Corporate governance report

Annual remuneration report continued

Directors’ interests at 31 March 2024 or on cessation (audited)

The following tables show the beneficial interests in BT Group plc shares of directors and persons closely associated as at 31 March 2024

(or at the point of leaving for directors who left during the year).

The first table includes interests held by the Executive Directors under BT Group plc’s share plans. The numbers represent the maximum

possible vesting levels. Full details of all DBP and RSP awards, including restricted periods and vesting conditions, are set out on page

118.

For Executive Directors we use the average BT Group plc share price over the preceding 12 months (or the share price at acquisition/

vesting date if higher) to determine whether the minimum shareholding requirement has been reached.

During the period 1 April 2024 to 15 May 2024, there were no movements in directors’ beneficial holdings or other interests in shares. The

directors, as a group, beneficially own less than 1% of BT Group plc’s shares.

Executive Directors

Number of shares

owned outright at

31 March 2024

RSP and

DBP

Options

Shareholding

requirement

(% of salary)

Current

shareholding

(% of salary)

Allison Kirkby 525,000 787,019 0 500% 161%

Simon Lowth 1,186,387 2,695,526 11,222 500% 728%

a Subject to continued employment and, for the RSP, two underpins over the initial three-year vesting period.

b Includes interests in saveshare, a HMRC-approved all-employee plan and yourshare, a HMRC-approved share incentive plan.

Beneficial holding owned

outright at 1 April 2023

Beneficial holding owned

outright at 31 March 2024

Chairman

Adam Crozier 62,500 62,500

Non-Executive Directors

Ruth Cairnie

n/a 25,000

Maggie Chan Jones 0 70,000

Steven Guggenheimer 0 4,700

Isabel Hudson 24,090 24,090

Matthew Key 161,686 209,586

Raphael Kübler

0 0

Sara Weller 37,000 47,000

Directors who left during the year

Philip Jansen

6,412,792 7,366,259

Adel Al-Saleh

0 0

Ian Cheshire

19,646 19,646

Iain Conn

69,442 69,442

Total 6,787,156 7,898,223

a Ruth was appointed as a Director on 6 April 2023.

b Raphael was appointed as a Director on 30 January 2024.

c Philip stepped down as a Director and Chief Executive on 31 January 2024 and the number reflects his holding at that date.

d Adel stepped down as a Director on 31 December 2023 and the number reflects his holding at that date.

e Ian and Iain stepped down as Directors at the conclusion of the AGM on 13 July 2023 and the number reflects their holding at that date.

BT Group plc Annual Report 2024

117 Corporate governance report

1 April 2023

Awarded/

granted

Dividends

reinvested Vested Lapsed

Total

number of

award

shares at

31 March

2024

Vesting date

Price at

grant

Market

price at

date of

vesting

Market

price at

date of

exercise

Monetary

value of

vested

award

£000

Allison Kirkby

RSP 2023

– 1,484,942 1,484,942 15/06/2026 107.00p

Simon Lowth

DBP 2020

806,314 806,314 – 03/08/2023 119.27p 113.43p 915

DBP 2021

464,055 31,346 495,401 24/06/2024 203.16p

DBP 2022

253,169 17,100 270,269 24/06/2025 184.35p

DBP 2023

234,442 15,835 250,277 15/06/2026 140.00p

RSP 2020

1,184,694 53,349 394,899 843,144 03/08/2023 106.11p 113.43p 448

RSP 2021

773,426 52,243 825,669 24/06/2024 203.16p

RSP 2022

860,778 58,144 918,922 24/06/2025 184.35p

RSP 2023

1,388,429 93,787 1,482,216 15/06/2026 114.00p

saveshare

(2019)

10,975 10,975 01/08/2024 163.92p

yourshare 2021

247 247 24/06/2024 202.70p

Former director

Philip Jansen

DBP 2020

1,182,364 1,182,364 – 03/08/2023 119.27p 113.43p 1,341

DBP 2021

694,092 46,885 740,977 24/06/2024 203.16p

DBP 2022

378,667 25,577 404,244 24/06/2025 184.35p

DBP 2023

343,782 23,221 367,003 15/06/2026 140.00p

RSP 2020

1,771,955 79,796 590,652 1,261,099 03/08/2023 106.11p 113.43p 670

RSP 2021

1,156,821 78,142 1,234,963 24/06/2024 203.16p

RSP 2022

1,262,230 85,262 1,347,492 24/06/2025 184.35p

yourshare 2021

247 247 24/06/2024 202.70p

a Award granted on 8 February 2024. The number of shares subject to award was calculated using the average middle market price of a BT Group plc share for the three dealing days

prior to grant. The award will vest in three equal tranches after three, four and five years. A holding period will apply such that no shares may be sold until year five. Two underpins will

apply over the initial three-year vesting period as set out on page 115.

b Awards granted on 16 June 2023. The number of shares subject to awards was calculated using the average middle-market price of a BT Group plc share for the three days prior to

grant.

c Awards granted on 3 August 2020. The number of shares subject to awards was calculated using the average middle market price of a BT Group plc share for the three dealing days

prior to grant. Awards vest in three equal tranches after three, four and five years. The Committee assessed performance against the two underpins at the end of the FY23 and

agreed that both had been satisfied. Tranche one vested on 3 August 2023. Tranche two will vest on 3 August 2024 and tranche three on 3 August 2025. A holding period will apply

such that no shares may be sold until year five.

d Awards granted on 24 June 2021. The number of shares subject to awards was calculated using the average middle market price of a BT Group plc share for the three dealing days

prior to grant. Awards will vest in three equal tranches after three, four and five years. A holding period will apply such that no shares may be sold until year five. Two underpins will

apply over the initial three-year vesting period as set out on page 114. The Committee assessed performance against the two underpins at the end of the financial year and agreed

that both had been satisfied. As a result, all three tranches of the 2021 RSP award will vest in full in June 2024, 2025 and 2026 respectively. Tranches one and two remain subject to a

holding requirement until June 2026.

e Award granted on 7 September 2023. The number of shares subject to award was calculated using the average middle market price of a BT Group plc share for the three dealing

days prior to grant. The award will vest in three equal tranches after three, four and five years. A holding period will apply such that no shares may be sold until year five. Two

underpins will apply over the initial three-year vesting period as set out on page 115.

f Option granted on 14 June 2019 under the employee saveshare scheme, in which all eligible employees of the group are entitled to participate.

g Awards granted on 24 June 2021 under the free share element of the BT Group plc Employee Share Investment Plan in which all eligible employees of the group were granted £500

worth of shares.

BT Group plc Annual Report 2024

118 Corporate governance report

Annual remuneration report continued

Implementation of the Policy in FY25

Base salary

Allison’s base salary of £1,100,000 was agreed on appointment in

January 2024. No salary increase will be awarded for 2024.

In line with an expected minimum increase granted across our UK

management population, Simon will receive a 2% salary increase

effective 1 June 2024.

Benefits

For Executive Directors, the Committee has set benefits in line

with the Policy. No changes are proposed to the benefit

framework for FY25.

Pension allowance

In line with the rate offered to the majority of our UK workforce,

both Executive Directors receive an annual allowance equal to

10% of salary in lieu of pension provision.

Annual bonus

Both Executive Directors are eligible for an on-target and

maximum bonus opportunity of 120% and 200% of salary

respectively. In line with the Policy, 50% of any bonus payable will

be deferred into shares for three years.

The Committee has reviewed in full the measures, weightings and

targets used in the annual bonus scorecard. The FY25 annual

bonus structure measures and weightings are set out below.

Category Measure Weighting

Financial

Adjusted EBITDA 35%

Normalised free cash flow 35%

Transformation

scorecard

NPS 20%

Inclusion & diversity 10%

All of the annual bonus measures are linked to our KPIs as set out

on pages 48 to 49.

In addition to the annual bonus scorecard, a health and safety

underpin applies which allows the Committee to exercise its

discretion to reduce the annual bonus payout result if there is a

significant breach in health and safety.

We do not publish details of the targets in advance as these are

commercially confidential. Targets will be disclosed in full in the

2025 Report on directors’ remuneration.

RSP

Both Executive Directors will be granted an award under the RSP

in June 2024 to the value of 200% of salary.

When considering the grant levels each year, the Committee takes

in account of the share price performance over the preceding year.

Following review, the Committee has agreed that awards will be

granted to both Executive Directors this year at the normal Policy

level of 200% of salary.

The Committee has agreed the same two underpins will apply for

the 2024 RSP awards which will be measured over the initial three-

year vesting period:

– Average ROCE must be at least 7%

– The business must have made sufficient progress over the vesting

period towards meeting our sustainability commitments (which

could include carbon emissions, carbon abatement and circularity).

Awards will vest in three equal tranches after three, four and five

years, with an additional holding period such that no shares may be

sold until year five. At vesting, additional shares representing the

value of reinvested dividends on the underlying shares are added.

Malus and clawback provisions and overarching Committee

discretion applies, as set out in the Policy.

Chairman and Non-Executive Director remuneration

The fees for Non-Executive Directors were reviewed in the year by

the Chairman and Executive Directors, taking into consideration

the role and requirements of BT Group, together with the fees paid

to non-executive directors at companies of a similar size and

complexity. Following the review it was agreed to increase the

base fee by 2% in line with the minimum expected budget for our

UK management colleagues. It was also agreed to consolidate the

Nominations Committee member’s fee (£10,000) into the base

fee. This means the base fee will increase from £78,540 to £90,000

a year effective from 1 June 2024.

The Chairman receives a single all-inclusive fee for his role. No

increase has been awarded for FY25 and this will remain at

£700,000.

Other changes agreed as part of the review were:

– An increase in the Responsible Business Committee chair’s fee

from £14,000 to £25,000

– An increase in the Responsible Business Committee member’s

fee from £8,000 to £15,000

– An increase in the fee for the Designated Non-Executive

Director for Workforce Engagement from £10,000 to £17,000.

The table below sets out the additional fees for membership and

chairing a Board Committee and reflects the changes agreed

during the year.

Committee Chair’s fee Member’s fee

Audit & Risk £35,000 £25,000

National Security &

InvestigatoryPowers

n/a

£8,000

Remuneration £30,000 £15,000

Responsible Business £25,000 £15,000

a Where the Chairman or Chief Executive acts as Chair of a Board Committee, no

additional Committee Chair fee is payable.

Other fees payable include:

– an additional fee of £27,000 per annum to the Senior

Independent Non-Executive Director

– an additional fee of £20,000 per annum to the Director

appointed to the joint venture between BT Group and Warner

Bros. Discovery.

No element of Non-Executive Director remuneration is

performance-related. Neither the Chairman nor the Non-

Executive Directors participate in our bonus or employee share

plans and nor are they members of any of the group pension

schemes.

BT Group plc Annual Report 2024

119 Corporate governance report

1 ROCE is defined on page 48.

Other remuneration matters

Advisers

During the year, the Committee received independent advice on

executive remuneration matters from Deloitte LLP. The

Committee is satisfied that the advice provided by Deloitte has

been objective and independent. The Deloitte partner who

provides remuneration advice to the Committee does not have

any connections with BT Group plc that may impact their

independence. Deloitte received £75,800 (excluding VAT) in fees

for these services.

The fees are charged on a time-spent basis in delivering advice.

That advice materially assisted the Committee in its consideration

of matters relating to executive remuneration and the Policy.

Deloitte is a founder member of the Remuneration Consultants

Group and as such, voluntarily operates under the code of conduct

in relation to executive remuneration consulting in the UK.

In addition, during FY24, Deloitte provided the group with advice

on corporate and indirect taxes, assistance with regulatory, risk

and compliance issues, accounting advice, and additional

consultancy services.

Dilution

We use both treasury shares and shares purchased by the

BT Group Employee Share Ownership Trust (the Trust) to satisfy

our all-employee share plans and executive share plans. Shares

held in the Trust do not have any voting rights.

As at 31 March 2024, shares equivalent to 2.31% (FY23: 3.03%) of

the issued share capital (excluding treasury shares) would be

required to satisfy all outstanding share options and awards. Of

these, we estimate that for FY25, shares equivalent to

approximately 0.27% (FY23: 0.87%) of the issued share capital

(excluding treasury shares) will be required to satisfy the all-

employee share plans.

Previous AGM voting outcomes

The table below sets out the previous votes cast at the AGM in

respect of the Annual remuneration report and the Policy.

For

% of votes cast/

Number

Against

% of votes cast/

Number

Withheld votes/

Number

Report on

directors’

remuneration

at the 13 July

2023 AGM

98.15 1.85

6,801,425,259 128,049,792 1,580,860

Policy at the

13July 2023

AGM

98.17 1.83

6,798,003,577 126,721,663 6,331,473

Withheld votes are not counted when calculating voting

outcomes.

Committee evaluation FY24

Details on the FY24 Board and Committee evaluation can be

found on page 94.

Comparison of Chief Executive remuneration to TSR

(unaudited)

TSR is the measure of the returns that a company has provided for

its shareholders, reflecting share price movements and assuming

reinvestment of dividends. The graph below illustrates the

performance of BT Group plc measured by TSR relative to a broad

equity market index over the past ten years. We consider the FTSE

100 to be the most appropriate index against which to measure

performance, as BT Group plc has been a member of the FTSE 100

throughout the ten-year period.

BT Group plc’s TSR performance vs the FTSE 100

Source: Datastream

History of Chief Executive remuneration

Year end Chief Executive

Total

remuneration

£000

Annual bonus

(% of max)

ISP/RSP

vesting

(% of max)

2024 Allison Kirkby

341 n/a n/a

Philip Jansen

3,719 65.9% 100%

2023 Philip Jansen 3,089 43.7% 100%

2022 Philip Jansen 3,460 60% 19.1%

2021 Philip Jansen 2,628 60% 0%

2020 Philip Jansen 3,248 50% n/a

2019 Philip Jansen 725 56% n/a

Gavin Patterson

1,719 28% 0%

2018 Gavin Patterson 2,307 54% 0%

2017 Gavin Patterson 1,345 0% 0%

2016 Gavin Patterson 5,396 45% 82.0%

2015 Gavin Patterson 4,562 58% 67.4%

a Allison was appointed as a Director on 15 March 2019 and became Chief Executive

from 1 February 2024. Her first RSP award was granted in February 2024.

b Philip was appointed as a Director on 1 January 2019 and became Chief Executive

from 1 February 2019. His first ISP award was granted in February 2019. Philip stood

down as Chief Executive on 31 January 2024.

c Gavin stood down as Chief Executive on 31 January 2019 .

BT Group plc Annual Report 2024

120 Corporate governance report

Annual remuneration report continued

Directors’ service agreements and letters of

appointment

The following table sets out the dates on which directors’ service agreements/initial letters of appointment commenced and termination

provisions:

Executive Directors

Commencement date Termination provisions

Allison Kirkby 1 February 2024

Directors’ service agreements do not contain fixed term periods and are

terminable by BT Group plc on 12 months’ notice and by the director on six

months’ notice.

Simon Lowth 4 July 2016

Chairman and Independent Non-Executive Directors

Commencement date Termination provisions

Adam Crozier 1 November 2021 The letter of appointment does not contain a fixed term period and is terminable

by BTGroup plc on 12 months’ notice and by the director on six months’ notice.

Ruth Cairnie 6 April 2023

Letters of appointment do not contain fixed term periods and are terminable by

either party on three months’ written notice.

Maggie Chan Jones 1 March 2023

Steven Guggenheimer 1 October 2022

Isabel Hudson 1 November 2014

Matthew Key 25 October 2018

Sara Weller 16 July 2020

Non-Independent, Non-Executive Director

Commencement date Termination provisions

Raphael Kübler 30 January 2024 Appointed as a Non-Independent, Non-Executive Director under the terms of the

Relationship Agreement between BT Group plc and Deutsche Telekom. The

appointment is terminable immediately by either party.

As announced on 7 May 2024, Tushar Morzaria joined the Board as an Independent Non-Executive Director with immediate effect. In

addition, Isabel Hudson will step down from the Board at the conclusion of the AGM on 11 July 2024.

There are no other service agreements, letters of appointment or material contracts, existing or proposed, between BT Group plc and any

of the directors. There are no arrangements or understandings between any director or executive officer and any other person pursuant

to which any director or executive officer was selected to serve. There are no family relationships between the directors.

Independent Non-Executive Directors’ letters of appointment

Each Independent Non-Executive Director has an appointment letter setting out the terms of his or her appointment. We ask each Non-

Executive Director to allow a minimum commitment of 22 days each year, subject to Committee responsibilities, and to allow slightly

more in the first year in order to take part in the induction programme. The actual time commitment required in any year may vary

depending on business and additional time may be required during periods of increased activity.

The service agreements and letters of appointment are available for inspection by shareholders at BT Group plc’s registered office.

BT Group plc Annual Report 2024

121 Corporate governance report

Consideration of colleague and stakeholder views

Our colleagues are vital to our business and we believe in fairness throughout the group. There are several general reward principles

which we apply at all levels:

– We’ll provide a competitive package with reference to the relevant market for each colleague

– We’ll ensure colleagues can share in the success of the business, and through the operation of all-employee share plans encourage

colleagues to become shareholders

– Where appropriate, variable remuneration is provided to incentivise employees towards driving the strategic aims of the business.

Performance is based on both individual performance and the performance of the group, using a consistent framework for our senior

management team and the majority of other colleagues

– We offer a range of employee benefits, many of which are available to all colleagues

– We aim for transparency and a fair cascade of remuneration throughout the group

– Employment conditions for all colleagues reflect our values and are commensurate with those of a large publicly listed company,

including high standards of health and safety, and a strong commitment to inclusion, diversity and wellbeing.

The Committee supports fairness and transparency of remuneration arrangements and the Policy has been designed to align with the

remuneration philosophy and principles that underpin remuneration across the wider group. To support this, the Committee receives

regular updates on HR policies and reward practices for the wider workforce as well as updates on employee relations.

Whilst the Committee does not directly consult with our employees as part of the process of determining executive pay, the Board does

receive feedback from employee surveys that take into account remuneration throughout the organisation. The Designated Non-

Executive Director for Workforce Engagement also updates the Committee on sentiments being raised by our colleagues in relation to the

remuneration of our workforce and related decisions, as raised by the Colleague Board through their ‘hot topics’ discussions.

When setting Executive Directors’ remuneration, the Committee considers the remuneration of other senior managers and colleagues in

the group more generally to ensure that arrangements for Executive Directors are appropriate in this context. When determining salary

increases for Executive Directors, the Committee considers the outcome of the wider pay review for the group.

Chief Executive pay ratio

The table below sets out the Chief Executive pay ratios as at 31 March 2024, as well as those reported in respect of the prior five years.

This report will build up over time to show a rolling ten-year period.

The ratios compare the single total figure of remuneration of the Chief Executive with the equivalent figures for the UK lower quartile

(P25), median (P50) and upper quartile (P75) employees.

A significant proportion of the Chief Executive’s remuneration is delivered through long term incentives, where awards are linked to share

price movements over the longer term. This means that the ratios will depend significantly on long term incentive outcomes and may

fluctuate from year to year, for example, the highest ratio was exhibited in 2024 due to an above-target bonus payout, and the vesting of

two separate tranches of RSP awards to Philip Jansen. We believe that these ratios are appropriate given the size and complexity of the

business, and are a fair reflection of our remuneration principles and practices.

We have used the ‘Option B’ methodology (based on gender pay reporting), as the most robust way to identify the individual reference

points within an organisation with multiple operating segments.

Total remuneration

Employee remuneration Pay ratio

Chief Executive P25 P50 P75 P25 P50 P75

2019 £2,444,000 £34,281 £41,477 £51,594 71:1 59:1 47:1

2020 £3,248,000 £34,881 £42,173 £51,351 93:1 77:1 63:1

2021 £2,628,000 £35,569 £41,600 £50,391 74:1 63:1 52:1

2022 £3,350,000 £35,722 £40,059 £49,488 94:1 84:1 68:1

2023 £2,956,000 £36,960 £40,095 £50,999 80:1 74:1 58:1

2024 £3,953,000 £35,794 £37,617 £53,691 110:1 105:1 74:1

Base salary

Employee remuneration Pay ratio

Chief Executive P25 P50 P75 P25 P50 P75

2019 £1,222,000 £30,090 £35,918 £41,740 37:1 31:1 27:1

2020 £1,100,000 £31,144 £37,321 £42,800 35:1 29:1 26:1

2021 £1,100,000 £31,842 £35,606 £42,836 35:1 31:1 26:1

2022 £1,100,000 £31,637 £35,017 £43,908 35:1 31:1 25:1

2023 £1,100,000 £33,144 £35,948 £44,986 33:1 31:1 24:1

2024 £1,100,000 £31,973 £34,100 £45,948 34:1 32:1 24:1

BT Group plc Annual Report 2024

122 Corporate governance report

Remuneration in context

The total FTE remuneration paid during the year in question for each employee in each of the groups was then calculated, on the same

basis as the information set out in the ‘single figure’ table for the Chief Executive. Bonus payments in respect of each year have been

determined based on the latest available information at the time of analysis. The median total remuneration figure for each group was

then used to determine the three ratios.

Percentage change in remuneration of the Executive and Non-Executive Directors and all employees

BT Group plc, our parent company, employs our Chairman, Executive and Non-Executive Directors only, and as such no meaningful

comparison can be drawn based on the parent company alone, as is required by the reporting regulations.

Instead, we have chosen to present a comparison with our UK management and technical employee population, comprising around

23,000 colleagues.

We believe this is the most meaningful comparison given the nature of our workforce, as this group has similar performance-related pay

arrangements as our Executive Directors. This is also consistent with prior year disclosures.

The salary/fee levels set out in the table below are in accordance with the Policy. Any increase in fees paid to the Non-Executive Directors

reflects both the annual fee review as well as any changes in role including additional Committee responsibilities.

FY24 (% change) FY23 (% change) FY22 (% change) FY21 (% change)

Salary/

fees Benefits

Annual

bonus

Salary/

fees Benefits

Annual

bonus

Salary/

fees Benefits

Annual

bonus

Salary/

fees Benefits

Annual

bonus

Chairman

Adam Crozier 0% (8%) – 0% 1,100% – – – – – – –

Executive Directors

Allison Kirkby

130% 338% – 1% 100% – 0% 6% – –

Philip Jansen

0% (5) % 51% 0% 13% (27) % 0% 2% 0% 0% (14) % 0%

Simon Lowth 3% 4% 59% 2% 5% (26) % 0% (4) % 0% 0% (5) % (2) %

Non-Executive Directors

Adel Al-Saleh

– – – – – – – – – – – –

Ruth Cairnie

– – –

Maggie Chan Jones 0% 0% – – – –

Ian Cheshire

0% 0% – 8% – – 8% 19% – –

Iain Conn

0% 0% – 1% – – 0% 33% – –

Steve Guggenheimer 0% 140% – – – –

Isabel Hudson 1% 100% – 1% 0% – 0% 4% (66) % –

Matthew Key 9% 100% – 9% 100% – 2% 13% – –

Raphael Kübler

– – –

Sara Weller 1% 0% – 5% – – 0% – – –

UK management colleagues 5.5% 0% 53% 3% 0% (25) % 0% 0% 0% 0% 0% 18%

a Allison was appointed as Chief Executive during FY24 so the increase reflects her change in responsibilities and benefits in line with the Policy.

b Philip received his salary and benefits until he stood down on 31 January 2024. The leaving arrangements for Philip are fully disclosed under Leaving arrangements for Philip Jansen

on page 116.

c Under the terms of the Relationship Agreement between BT Group plc and Deutsche Telekom and the Directors’ letter of appointment, no remuneration is payable for this position.

d Ruth joined during FY24 and so no relevant comparison can be presented.

e The director left during FY24 and any reduction reflects the pro-rated remuneration.

BT Group plc Annual Report 2024

123 Corporate governance report

Relative importance of the spend on pay

The table below shows the percentage change in total remuneration paid to all employees compared to expenditure on dividends and

share buybacks.

Area FY24 (£m) FY23 (£m) % change

Remuneration paid to all employees 4,921 4,952

(0.63) %

Dividends/share buybacks

840

940

(10.6) %

a Includes share purchases by the Trust as set out in note 21 to the consolidated financial statements.

Inclusion and diversity

Embracing inclusion, diversity, accessibility and equality is core to our people strategy and critical to our growth. Our Inclusion, Equity and

Diversity Strategy is a programmatic, evidence-based approach to help us understand and remove bias and other cognitive barriers from

policies, processes, systems and decision making.

It supports our aim to build the strongest foundations by making sure we apply an inclusion lens to everything we do and by promoting a

culture where colleagues can thrive.

More details on our Inclusion, Equity and Diversity Strategy can be found on pages 31 to 33.

Gender pay gap reporting

At a group-level, our median hourly pay gap between male and female colleagues has decreased to 5.6% (6.1% in 2022). This remains

favourably below the high-tech industry median of 12.9%, and the UK national median of 14.3% (ONS provisional).

Our Gender Pay Gap statement sets out the key information required under legislation and is available on our website bt.com/

genderpaygap

Ruth Cairnie

Chair of the Remuneration Committee

15 May 2024

BT Group plc Annual Report 2024

124 Corporate governance report

Remuneration in context continued

The directors are responsible for preparing the

Annual Report and the group and parent company

financial statements in accordance with

applicable law and regulations.

Company law requires the directors to prepare group and parent

company financial statements for each financial year. Under that

law they are required to prepare the group financial statements in

accordance with UK-adopted international accounting standards

and with the requirements of the Companies Act 2006. The parent

company meets the definition of a qualifying entity under FRS 100

and the company financial statements are prepared in accordance

with United Kingdom Generally Accepted Accounting Practice

(FRS 101 “Reduced disclosure framework”, and applicable law).

Under company law the directors must not approve the financial

statements unless they are satisfied that they give a true and fair

view of the state of affairs of the group and parent company, and

of the group’s profit or loss for that period. In preparing each of the

group and parent company financial statements, the directors are

required to:

– select suitable accounting policies and apply them consistently

– make judgements and estimates that are reasonable, relevant,

reliable and, in respect of the parent Company financial

statements only, prudent

– state whether the group financial statements have been

prepared in accordance with the UK-adopted international

accounting standards

– state whether applicable UK accounting standards have been

followed with regards to the parent company financial

statements, subject to any material departures disclosed and

explained in the parent company financial statements

– assess the group and parent company’s ability to continue as a

going concern and disclose, as applicable, matters related to

going concern

– use the going concern basis of accounting unless they either

intend to liquidate the group or the parent company or to cease

operations or have no realistic alternative but to do so.

The directors are responsible for keeping adequate accounting

records that are sufficient to show and explain the parent

company’s transactions and disclose with reasonable accuracy, at

any time, the financial position of the parent company, and enable

them to ensure that its financial statements comply with the 2006

Act. They are responsible for such internal control as they

determine is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due

to fraud or error. They have general responsibility for taking such

steps as are reasonably open to them to safeguard the assets of

the group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also

responsible for preparing an annual strategic report, directors’

report, report on directors’ remuneration and corporate

governance statement that comply with such law and regulation.

The directors are responsible for the maintenance and integrity of

the corporate and financial information included on the BT Group

website. Legislation in the UK governing the preparation and

dissemination of financial statements may differ from legislation in

other jurisdictions.

In accordance with Disclosure Guidance and Transparency Rule

(“DTR”) 4.1.16R, the financial statements will form part of the

annual financial report prepared under DTR 4.1.17R and 4.1.18R.

The auditor’s report on these financial statements provides no

assurance over whether the annual financial report has been

prepared in accordance with those requirements.

Responsibility statement of the Board in respect of the

annual financial report

We confirm, to the best of our knowledge that:

– the financial statements, prepared in accordance with the

applicable set of accounting standards, give a true and fair view

of the assets, liabilities, financial position and profit or loss of the

group and the undertakings included in the consolidation taken

as a whole

– the Strategic report and the Report of the directors include a

fair review of the development and performance of the business

and the position of the group and the undertakings included in

the consolidation taken as a whole, together with a description

of the principal risks and uncertainties that they face.

We consider that the Annual Report and Accounts, taken as a

whole, is fair, balanced and understandable and provides the

information necessary for shareholders to assess the group’s

position, performance, business model and strategy.

This responsibility statement was approved by the Board on

15May 2024 and was signed on its behalf by:

Allison Kirkby

Chief Executive

Simon Lowth

Chief Financial Officer

BT Group plc Annual Report 2024

125 Corporate governance report

Statement of directors’ responsibilities in respect of

the Annual Report and the financial statements

The directors present the Report of the

directors, together with audited financial

information for the year ended 31 March 2024.

The Report of the directors also encompasses the

entirety of our Corporate governance report on

pages 83 to 130 for the purpose of section 463

ofthe Companies Act 2006 (the 2006 Act). The

Report of the directors together with the

Strategic report on pages 1 to 82 form the

Management report for the basis of DTR 4.1.5R.

In accordance with DTR 4.1.14R, the financial

statements will form part of the annual

financial report prepared using the single

electronic reporting format under the TD ESEF

Regulation. The Auditor’s report on these

financial statements provides no assurance

overthe ESEF format.

Material accounting estimates, key judgements and

significant accounting policies

Our critical accounting estimates, key judgements and significant

accounting policies conform with UK-adopted International

Financial Reporting Standards (IFRS) and IFRSs issued by the

International Accounting Standards Board (IASB) and are set

outon page 150 of the consolidated financial statements. The

directors have reviewed these policies and applicable estimation

techniques and have confirmed that they are appropriate for the

preparation of the FY24 consolidated financial statements.

Disclosure of information to the auditor

As far as each of the directors is aware, there is no relevant audit

information (as defined by section 418(3) of the 2006 Act) that

hasn’t been disclosed to the auditor. Each of the directors confirms

that all steps have been taken that ought to have been to make

them aware of any relevant audit information and to establish that

the auditor has been made aware of that information.

Going concern

In line with IAS 1 ‘Presentation of financial statements’, and FRC

guidance on ‘risk management, internal control and related

financial and business reporting’, management has taken into

account all available information about the future for a period of

atleast, but not limited to, 12 months from the date of approval

ofthe financial statements when assessing the group’s ability

tocontinue as a going concern.

The Strategic report on pages 1 to 82 includes information on

thegroup structure, strategy and business model, the performance

ofeach customer-facing unit and the impact of regulation and

competition. The Group performance section on pages 50 to 57

includes information on our group financial results, financial

outlook, cash flow and net debt, and balance sheet position. Notes

23, 25, 26 and 28 of the consolidated financial statements include

information on the group’s investments, cash and cash

equivalents, borrowings, derivatives, financial risk management

objectives, hedging policies and exposure to interest, foreign

exchange, credit, liquidity and market risks.

Our principal risks and uncertainties are set out on pages 63 to 70

including details of each risk and how we manage them. The

directors carried out a robust assessment of the principal risks

affecting the group, including any that could threaten our business

model, future performance, insolvency or liquidity.

This assessment is consistent with the assessment of our viability,

as set out on pages 81 to 82, which has been based on the

Company’s strategy, balance sheet and financing position,

including our £2.1bn undrawn committed borrowing facility which

matures in March 2027, and the potential impact of Our principal

risks and uncertainties on pages 63 to 70; and which estimates

the financial impact for a severe but plausible outcome for each

risk, both individually and in combination through stochastic risk

modelling. This stress testing confirmed that existing projected

cash flows and cash management activities provide us with

adequate headroom over the going concern assessment period.

Having assessed the principal and emerging risks, the directors

considered it appropriate to adopt the going concern basis of

accounting when preparing the financial statements. This

assessment covers the period to May 2025, which is consistent

with FRC guidance. When reaching this conclusion, the directors

took into account the group’s overall financial position (including

trading results and the ability to repay term debt as it matures

without recourse to refinancing) and the exposure to principal

risks (including severe but plausible downsides, refer to the

Viability statement on pages 81 to 82).

At 31 March 2024, the group had cash and cash equivalents of

£0.4bn and current asset investments of £2.4bn. The group also

had access to committed borrowing facilities of £2.1bn. These

facilities were undrawn at the period-end and are not subject to

renewal until March 2027.

Independent advice

The Board has a procedure that allows directors to seek

independent professional advice at our expense. All directors also

have access to the advice and services of the Company Secretary

and her nominated delegate.

Directors’ and officers’ liability insurance and

indemnity

We routinely buy insurance cover for directors, officers and

employees in positions of managerial supervision of BT Group plc

and its subsidiaries. This is intended to protect against defence

costs, civil damages and, in some circumstances, civil fines and

penalties (provided they are insurable) following an action

brought against them in their personal capacity. The policy also

covers individuals serving as directors of other companies or of

joint ventures, or on boards of trade associations or charitable

organisations at the group’s request. The insurance protects the

directors and officers directly in circumstances where, by law,

BTGroup plc cannot provide an indemnity. It also provides the

group, subject to a retention, with cover against the cost of

indemnifying a director or officer. One layer of insurance is ring-

fenced for the directors of BT Group plc.

As at 15 May 2024, and throughout FY24, BT Group plc’s wholly

owned subsidiary, British Telecommunications plc, has provided

an indemnity for a group of people similar to the group covered by

the above insurance. Neither the insurance nor the indemnity

provides cover where the individual is proven to have acted

fraudulently or dishonestly.

As permitted by BT Group plc’s Articles of Association, and to the

extent permitted by law, the group indemnifies each of its

directors and other officers against certain liabilities that may be

BT Group plc Annual Report 2024

126 Corporate governance report

Report of the directors

incurred as a result of their positions within the group. The

indemnity was in force throughout the tenure of each director

during the last financial year, and remains in force.

Interest of management in certain transactions

During and at the end of FY24, none of BT Group plc’s directors

were materially interested in any material transaction in relation to

the group’s business. None are materially interested in any

currently proposed material transactions.

Power to authorise conflicts

All directors have a duty under the 2006 Act to avoid a situation in

which he or she has, or can have, a direct or indirect interest that

conflicts, or possibly may conflict, with the interests of the group.

BT Group plc’s Articles of Association include provisions for

dealing with directors’ conflicts of interest in accordance with the

2006 Act. The group has procedures in place, which it follows, to

deal with such situations. These require the Board to:

– consider each conflict situation separately on its particular facts

– consider the conflict situation in conjunction with its other duties

under the 2006 Act

– keep records and Board minutes on any authorisations granted

by directors and the scope of any approvals given

– regularly review conflict authorisation.

The Company Secretary maintains a conflicts of interest register.

The Conflicted Matters Committee identifies to what extent Board

and Committee materials are likely to refer to a potential or actual

conflict of interest between BT Group plc and Deutsche Telekom

and, as a result, what materials should be shared with our Non-

Independent, Non-Executive Director and Deutsche Telekom

nominated representative. He owes duties to both BT Group plc

and Deutsche Telekom, and the Conflicted Matters Committee

helps him comply with his fiduciary duties, although ultimate

responsibility rests with him.

Systems of risk management and internal control

The Board is responsible for reviewing the group’s systems of risk

management and internal control each year, and for ensuring their

effectiveness, including in respect of relevant assurance activities.

These systems are designed to manage, rather than eliminate,

risks we face that may prevent us from achieving our business

objectives and delivering our strategy. Any system can provide

only reasonable, and not absolute, assurance against material

misstatement or loss.

Our group risk management framework is simple and consistent,

and defines our (1) risk mindset, (2) risk process and activities; and

finally (3) governance. The framework:

– provides the business with the tools to take on the right risks and

make smart risk decisions

– supports the identification, assessment and management of the

principal risks and uncertainties faced by the group

– is an integral part of BT Group’s annual strategic review cycle.

The framework was designed in accordance with the FRC

guidance on risk management, internal control and related

financial and business reporting and has been in operation

throughout the year and up to the date on which this document

was approved. The framework was reviewed in FY24 and was

deemed effective. Continuous improvements were made in FY24,

including the rollout of a new training programme to establish a

core level of understanding of expectations across our senior

leadership team and all those with roles that are key to making our

framework a success. There was also focus on embedding our Key

Control Framework, a set of Group requirements, defined by

subject matter experts, to be implemented consistently across all

Units.

More information on our group risk management framework can

be found in the Risk management section on pages 61 to 62.

Internal audit carry out periodic assessments of the quality of risk

management and control, promote effective risk management

across all our units and report to management and the Audit & Risk

Committee on the status of specific areas identified for

improvement. We do not cover joint ventures and associates not

controlled by the group in the scope of our group risk

management framework. Such third parties are responsible for

their own internal control assessment.

Furthermore, the Audit & Risk Committee, on behalf of the Board,

reviews the effectiveness of the systems of risk management and

internal control across the group. Further details on how the Audit

& Risk Committee fulfils these duties can be found on page 102.

Capital Management and Funding Policy

The objective of our Capital Management Policy is to target an

overall level of debt consistent with our credit rating objectives,

while investing in the business, supporting our pension schemes

and meeting our Distribution Policy.

The Board regularly reviews the group’s capital structure.

Management proposes actions and produces analyses which

reflect the group’s investment plans and risk characteristics, as

well as the macroeconomic conditions in which we operate.

Our Funding Policy is to raise and invest funds centrally to meet

the group’s anticipated requirements. We use a combination of

capital market bond issuance and committed borrowing facilities

to fund the group. When issuing debt, in order to avoid refinancing

risk, group treasury will take into consideration the maturity profile

of the group’s debt portfolio, financial market conditions as well as

forecast cash flows.

See note 28 to the consolidated financial statements for details of

our Treasury Policy.

Financial instruments

Details of the group’s financial risk management objectives,

policies of the group and exposure to interest risk, credit risk,

liquidity risk and foreign exchange are given in note 28 to the

consolidated financial statements.

Credit Risk Management Policy

We take proactive steps to minimise the impact of adverse market

conditions on our financial instruments. In managing investments

and derivative financial instruments, group treasury monitors the

credit quality across treasury counterparties and actively manages

any exposures that arise. Management within the business units

also actively monitors any exposures arising from trading balances.

Off-balance sheet arrangements

Other than the financial commitments and contingent liabilities

disclosed in note 31 to the consolidated financial statements,

there are no off-balance sheet arrangements that have, or are

reasonably likely to have, a current or future material effect on:

– our financial condition

– changes in financial condition

– revenues or expenses

– results of operations

– liquidity

– capital expenditure

– capital resources.

BT Group plc Annual Report 2024

127 Corporate governance report

We use a supply chain financing programme with a limited number

of suppliers with short payment terms to extend them a more

typical payment term. More details are disclosed in note 17 to the

consolidated financial statements.

Legal proceedings

The group is involved in various legal proceedings, including actual

or threatened litigation and government or regulatory

investigations. For further details of legal and regulatory

proceedings to which the group is party, please see note 18 to the

consolidated financial statements.

Apart from the information disclosed in note 18 to the

consolidated financial statements, the group does not currently

believe that there are any legal proceedings, government or

regulatory investigations that may have a material adverse impact

on the operations or financial condition of the group. In respect of

each of the claims described in note 18, the nature and

progression of such proceedings and investigations can make it

difficult to predict the impact they will have on the group. Many

factors prevent us from making these assessments with certainty,

including the fact that some such proceedings or investigations

are in early stages, no damages or remedies have been specified,

and/or the frequently slow pace of litigation.

Other information – Listing Rules

For the purposes of the Listing Rule (LR) 9.8.4R, the information

below is disclosed as follows:

Section information Page

LR 9.8.4R(4) 50

LR 9.8.4R(12) See below

LR 9.8.4R(13) See below

In respect of LR 9.8.4R(12) and (13), the trustee of the BT Group

Employee Share Ownership Trust (the Trust) agrees to waive

dividends payable on the BT Group plc shares it holds for satisfying

awards under the group’s executive share plans.

Under the rules of these share plans, the dividends are reinvested

in BT Group plc shares that are added to the relevant share

awards.

No other information is required to be disclosed pursuant to

LR 9.8.4R.

Other statutory information – the 2006 Act

Certain provisions of the 2006 Act (or regulations made pursuant

thereto) require us to make additional disclosures within the

Report of the directors. The disclosures referred to below are

included elsewhere in this Annual Report and incorporated by

reference into the Report of the directors:

Section information Page

Future developments 1 to 82

Particulars of any important events affecting BT

Group or any of its subsidiary undertakings which

have occurred since the end of the financial year

221

Research and development activities 15

How the directors have engaged with UK

employees, had regard to UK employee interests,

and the effect of that regard, including on principal

decisions during the year

24, 41

and

90 to 93

How the directors have had regard to the need to

foster business relationships with suppliers,

customers and others, and the effect of that regard,

including on principal decisions during the year

26 to 27,

40 to 45

and

90 to 93

Greenhouse gas emissions, energy consumption

and energy efficiency action

38,72

and 80

Structure of BT Group plc’s share capital

(including the rights and obligations attaching to

the shares)

147

Significant agreements to which BT Group plc is a

party that take effect, alter or terminate upon a

change of control following a takeover

n/a

Related undertakings 226 to 230

The following disclosures are not covered elsewhere

in this Annual Report:

– BT Group has two employee share ownership trusts that hold

BT Group plc shares for satisfying awards under our various

employee share plans

– the trustee of the BT Group Employee Share Investment Plan

may invite participants, on whose behalf it holds shares, to direct

it how to vote in respect of those shares. If there is an offer for

the shares or another transaction that would lead to a change of

control, such participants may direct the trustee to accept the

offer or agree to the transaction

– in respect of shares held in the Trust, the trustee abstains from

voting those shares if there is an offer for the shares. The trustee

does not have to accept or reject the offer but will have regard to

the interests of the participants, may consult with the participants

to obtain their views on the offer, and may otherwise take any

action with respect to the offer that it thinks is fair

– EasyShare is the group’s corporate sponsored nominee service,

which allows UK and European Economic Area resident

shareholders to hold BT Group plc shares electronically

– EasyShare is administered by Equiniti Financial Services Limited.

As at 15 May 2024, 419m shares were held in EasyShare (4.21%

of the issued share capital (4.22% excluding treasury shares))

on behalf of BT Group plc shareholders

– no person holds securities carrying special rights with regard to

control of the group

– our share registrar, Equiniti, must receive proxy appointment

and voting instructions not less than 48 hours before any

general meeting (see page 130)

– the business of BT Group is managed by the Board. The

directors may exercise all the powers of BT Group plc, subject to

the Articles of Association, legislation and regulation. This

includes the ability to exercise the authority to allot or purchase

BT Group plc shares pursuant to shareholders passing an

ordinary resolution at the Annual General Meeting (AGM)

– we have no agreements with directors providing for

compensation for loss of office or employment as a result of a

takeover. Similarly, there is no provision for this in our standard

employee contracts

– we’re not aware of any agreements between shareholders that

may result in restrictions on the transfer of shares or on

votingrights.

BT Group plc Annual Report 2024

128 Corporate governance report

Report of the directors continued

Articles of Association

BT Group plc’s current Articles of Association were adopted

pursuant to a resolution passed at the AGM of BT Group plc held

on 15 July 2021 and contain, amongst others, provisions on the

rights and obligations attaching to BT Group plc’s shares.

The Articles of Association may only be amended by special

resolution at a general meeting of the shareholders in accordance

with applicable legislation.

A copy of the current Articles of Association is available at

bt.com/articles

Directors’ appointment, retirement and removal

The Articles of Association regulate the appointment and removal

of directors, as does the 2006 Act and related legislation. The

Board, and shareholders (by ordinary resolution), may appoint a

person who is willing to be elected as a director, either to fill a

vacancy or as an additional director. At every AGM, all directors

must automatically retire. A retiring director is eligible for election

or re-election, as applicable. In addition to any power of removal

under the 2006 Act, the shareholders can pass an ordinary

resolution to remove a director.

Raphael Kübler was appointed as a Non-Independent, Non-

Executive Director under the terms of the Relationship Agreement

between BT Group plc and Deutsche Telekom. His appointment is

terminable immediately by either party.

Share rights

(a) Voting rights

On a show of hands, every shareholder present in person or by

proxy at any general meeting has one vote and, on a poll, every

shareholder present in person or by proxy has one vote for each

share which they hold.

There are no restrictions on exercising voting rights except in

situations where BT Group plc is legally entitled to impose such a

restriction (for example where a notice under section 793 of the

2006 Act has been served).

(b) Variation of rights

If the share capital of BT Group plc were to be split into different

classes of shares by special resolution, the special rights attached

to any of those classes can be varied or withdrawn either: (i) with

the sanction of a special resolution passed at a separate meeting

of the holders of the shares of that class; or (ii) with the consent in

writing of the holders of at least 75% in nominal value of the issued

shares of that class. BT Group plc can issue new shares and attach

any rights and restrictions to them, as long as this is not restricted

by special rights previously given to holders of any existing shares.

Subject to this, the rights of new shares can take priority over the

rights of existing shares, or existing shares can take priority over

them, or the new shares and the existing shares can rank equally.

BT Group plc currently has one class of shares.

Transfer of shares

There is no specific restriction on the transfer of BT Group plc

shares in the group, which is governed by the Articles of

Association and prevailing legislation.

Political donations

Our policy is that no company in the group will make contributions

in cash or in kind to any political party, whether by gift or loan.

However, the definition of political donations used in the 2006 Act

is significantly broader than the sense in which these words are

ordinarily used. The 2006 Act’s remit could cover making

members of Parliament and others in the political world aware of

key industry issues and matters affecting BT Group plc, and

enhancing their understanding of the group.

The authority for political donations requested at the 2024 AGM is

not intended to change this policy. It does, however, ensure that

the group continues to act within the provisions of the 2006 Act,

requiring companies to obtain shareholder authority before they

make donations to political parties and/or political organisations

as defined in the 2006 Act. During FY24, BT Group plc’s wholly

owned subsidiary, British Telecommunications plc, paid the costs

of attending events at (i) the Labour Party Conference and

Business Conference; (ii) the Conservative Party Conference; and

(iii) the Liberal Democrats Business Day. These costs totalled

£9,343 (FY23: £5,848). No company in the BT Group made any

loans to any political party.

Substantial shareholdings

As at 31 March 2024, BT Group plc had received notice, under the

DTRs, in respect of the following holdings of 3% or more of the

voting rights in its issued ordinary share capital:

Date of notification Shares

% of total

voting rights

Altice UK S.à r.l. 22 May 2023 2,435,476,188 24.50%

T-Mobile

Holdings 23 March 2018 1,196,175,322 12.06%

BlackRock, Inc. 13 June 2023 470,325,337 4.73%

As at 15 May 2024, BT Group had not received any further such

notices under the DTRs.

Colleague engagement

Engaging with our colleagues is critical to creating a culture where

they can be their best and contribute to our purpose, ambition,

strategy and long term success.

Engaging with our colleagues takes many forms, including

through:

– the Board receiving regular updates from the Chief Executive

and Chief Human Resources Officer on colleagues, key people

strategy initiatives, culture and overall sentiment in the

organisation

– our Designated Non-Executive Director for Workforce

Engagement and the Colleague Board. The Colleague Board

was in place throughout most of FY24, however the Board made

the decision to disband the Colleague Board and going forward

the Designated Non-Executive Director for Workforce

Engagement will engage in a comprehensive colleague

outreach programme in its place (see pages 90 to 91)

– our quarterly Your Say colleague engagement surveys

– regular colleague communications.

Colleagues are kept well informed on matters such as the strategy

and performance of the group, including after certain key events

such as results and trading updates. We work with our highly

active, engaged and award-winning People Networks. These

colleague-driven groups raise awareness and advocate for change

both inside and outside BT Group.

Colleague engagement is 75%, +5% vs UK external benchmarks

and +4% since September. The resolution of industrial action and

agreement for a two-year pay award have contributed to the

improvement in sentiment.

BT Group plc Annual Report 2024

129 Corporate governance report

We encourage all of our colleagues to become shareholders in the

business through the operation of all-employee share plans. We

annually consider which all-employee plans to offer, both in the

UK and globally.

Employees with disabilities

We’re an inclusive employer and actively encourage the

recruitment, development, promotion and retention of disabled

people.

In FY24 we focused on three areas to support our disabled

colleagues:

– we committed to improving our workplace adjustments process

so that colleagues can get the adjustments that they need when

they need them, with a new initiative in the UK launched in July

with plans to extend the rollout to India

– a development programme specifically aimed at disabled

colleagues who are junior managers has been piloted, and work

is under consideration for rollout to all career levels

– we want all colleagues and people managers to understand

disability and how to support disabled colleagues, so we have

launched three disability advocacy training pathways and

published them to our internal disability hub for access by all

colleagues.

This is the first year that we reported our disability pay gap; it

reflects our drive for equal opportunity across all characteristics.

At the time of the snapshot date in April 2023, the mean and

median pay gaps were low, with a mean gap of 0.7% and a zero

median gap. Further information can be found on page 32.

We continued our partnership with the Business Disability Forum,

and we will be working to make sure that we are able to meet and

exceed the commitments we made to obtain our Disability

Confident leader status and our membership of Valuable 500.

Read more on inclusion and diversity at

bt.com/inclusion-and-diversity

AGM

Resolutions

At the 2024 AGM, shareholders will be asked to vote on all

resolutions including the Annual Report, the Report on directors’

remuneration, the election/re-election of directors, the

reappointment of KPMG LLP as our external auditor and to

authorise the Audit & Risk Committee to agree its remuneration,

giving authority to the directors to allot BT Group plc shares and

disapply pre-emption rights.

Before the AGM, our share registrar, Equiniti, will count the proxy

votes for and against each resolution, as well as votes withheld.

The voting results will be announced by way of a stock exchange

announcement and published on our website as soon as

reasonably practicable following the conclusion of the AGM. As at

previous AGMs, we will take votes on all matters at the 2024 AGM

on a poll.

The separate Notice of meeting 2024, which we send to all

shareholders who have requested shareholder documents by post,

contains the resolutions (with explanatory notes) which we will

propose at the 2024 AGM on 11 July 2024. We notify all

shareholders of the publication of these documents which are

available on our website at bt.com/annualreport

Authority to purchase shares

The authority given at the 2023 AGM for BT Group plc to purchase

in the market 993m of its shares, representing 10% of BT Group

plc’s issued share capital (excluding treasury shares), expires at

the conclusion of the 2024 AGM. We will ask shareholders to give

a similar authority at the 2024 AGM.

During FY24 and up to 15 May 2024, no shares were purchased

under this authority.

At the start of the year, £36m shares (having a total nominal value

of £1.8m, and constituting 0.36% of the issued share capital

(0.36% excluding treasury shares)) were held as treasury shares.

During FY24, 19.8m treasury shares (having a nominal value of

£995,000, and constituting 0.19% of the issued share capital

0.20% excluding treasury shares)) were transferred to meet

BTGroup plc’s obligations under its employee share plans. At

31March 2024, a total of 16.3m shares (having a total nominal

value of £815,000, and constituting 0.16% of the issued share

capital 0.16% excluding treasury shares)) were held as treasury

shares (see note 20 to the consolidated financial statements).

Since 31 March 2024 (up to and including 15 May 2024), 552,071

treasury shares (having a nominal value of £27,600, and

constituting 0.005% of the issued share capital (0.005% excluding

treasury shares)) have been transferred to meet BT Group plc’s

obligations under its employee share plans.

At 15 May 2024, a total of 15.7m shares (having a nominal value of

£787,300, and constituting 0.16% of the issued share capital

(0.16% excluding treasury shares)) were held as treasury shares.

In addition, during FY24 and up to 15 May 2024 the Trust

purchased 98.2m BT Group plc shares for a total consideration of

£132.5m. The Trust held 158.4m shares both at 31 March 2024

and 15 May 2024.

Cross-reference to the Strategic report

We have chosen to include the following information in the

Strategic report in line with the 2006 Act (otherwise required by

law to be included in the Report of the directors):

– the final dividend proposed by the Board (page 51)

– an indication of likely future developments in the business of

BT Group plc and its group (pages 1 to 82)

– an indication of our research and development activities (page

15)

– information about how the directors engaged with UK

employees, had regard to UK employee interests, and the effect

of that regard, including on principal decisions during the year

(pages 24, 41 and 90 to 91)

– information about how the directors have had regard to the

need to foster business relationships with suppliers, customers

and others, and the effect of that regard, including on principal

decisions during the year (pages 26 to 27, 40 to 45 and 90 to

91)

– information about greenhouse gas emissions, energy

consumption and energy efficiency action (pages 38, 71 to 80).

By order of the Board

Sabine Chalmers

Group General Counsel, Company Secretary &

DirectorRegulatoryAffairs

15 May 2024

BT Group plc Annual Report 2024

130 Corporate governance report

Report of the directors continued

Look out for these throughout the report

Contents

Significant

accounting policies

Independent auditor’s report 132

Critical and key accounting estimates

and significant judgements

Group income statement 145

Group statement of comprehensive income 146

Group balance sheet 147

Group statement of changes in equity 148

Group cash flow statement 149

Notes to the consolidated financial statements 150

Basis of preparation 150

Critical accounting estimates and significant judgements 151

Material accounting policies that apply to the overall

financial statements 152

Segment information 153

Revenue 156

Operating costs 160

Employees 161

Audit, audit related and other non-audit services 162

Specific items 162

Taxation 164

EPS 167

Dividends 167

Intangible assets 168

Property, plant and equipment 172

Leases 175

Trade and other receivables 179

Trade and other payables 182

Provisions & contingent liabilities 183

Retirement benefit plans 185

Own shares (BT Group) 196

Share-based payments 196

Divestments & assets and liabilities classified as held for sale 198

Investments 201

Joint ventures and associates 202

Cash and cash equivalents 205

Loans and other borrowings (BT Group) 206

Finance expense and income 210

Financial instruments and risk management 211

Other reserves 218

Related party transactions 218

Financial commitments 219

Re-presentation of prior year comparatives 220

Post balance sheet events 221

BT Group – Financial Statements of BT Group plc 222

Related undertakings 226

BT Group Additional Information/APM 231

BT Group plc Annual Report 2024

131 Financial statements

Financial

statements

1. Our opinion is unmodified

In our opinion:

– the financial statements of BT Group plc give a true and fair view

of the state of the Group’s and of the Parent Company’s affairs as

at 31 March 2024, and of the Group’s profit for the year then

ended;

– the Group financial statements have been properly prepared in

accordance with UK-adopted international accounting

standards;

– the Parent Company financial statements have been properly

prepared in accordance with UK accounting standards, including

FRS 101 Reduced Disclosure Framework; and

– the Group and Parent Company financial statements have been

prepared in accordance with the requirements of the Companies

Act 2006.

What our opinion covers

We have audited the Group and Parent Company financial

statements of BT Group plc (“the Company”) for the year ended

31 March 2024 (“FY24”) included in the Annual Report, which

comprise:

Group

– Group income statement,

– Group statement of comprehensive income,

– Group balance sheet,

– Group statement of changes in equity,

– Group cash flow statement

– Notes 1 to 33 to the Group financial statements, including the

accounting policies in the respective notes.

Parent Company (BT Group plc)

– Company balance sheet

– Company statement of changes in equity

– Notes 1 to 3 to the Parent Company financial statements,

including the accounting policies in note 1.

Basis for opinion

We conducted our audit in accordance with International

Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our

responsibilities are described below. We believe that the audit

evidence we have obtained is a sufficient and appropriate basis for

our opinion. Our audit opinion and matters included in this report

are consistent with those discussed and included in our reporting

to the Audit and Risk Committee (“ARC”).

We have fulfilled our ethical responsibilities under, and we remain

independent of the Group in accordance with, UK ethical

requirements including the FRC Ethical Standard as applied to

listed public interest entities.

2. Overview of our audit

Factors driving our view of risks

Our risk assessment is driven by understanding of the applicable

financial reporting framework, our knowledge of the business, the

industry and the wider economic environment in which BT Group

plc operates.

Revenue from non-long-term contracts remains a focus area due

to the complexity arising from the large number of low value

transactions managed through a number of distinct billing

systems, and the complex IT landscape linking the billing systems

together.

In addition, the bespoke nature of the pricing structure within some

of Business’ contracts means that there is a higher risk of

processing error and fraud in relation to a proportion of Business’

revenue derived from certain billing systems and estimation

uncertainty over the associated refund liabilities.

In the current year the Group recognised an impairment charge

against goodwill allocated to the Business cash generating unit

(CGU) of £488mn (FY23: nil), reflecting the execution risk of the

CGU’s business plan and increased uncertainty over the projected

cashflows.

The valuation of the BT pension scheme (“BTPS”) defined

obligation also remains a focus area as it is complex, relying on key

actuarial assumptions such as discount rates, RPI, and mortality.

We continue to have a focus on the BTPS which holds diverse

unquoted assets which are valued based on inputs not directly

observable. The valuation of these assets requires the involvement

of experts and significant judgement over the key unobservable

input.

We continue to identify the recoverability of the Parent Company

investment in subsidiaries as a focus area for the Parent Company's

standalone accounts. This is due to the materiality of the Parent

Company's investment in subsidiaries compared to the company’s

total assets.

The TNT Sport Joint venture company is in its second year of

operations and all significant risks associated with the initial

recognition of the balances relating to the disposal of the BT sports

division and subsequent re-investment in the Sports JV are no

longer applicable.

Key Audit Matters

Risk

FY24 vs FY23 Item

Accuracy of revenue due to complex

billing systems (Group)

4.1

Impairment of Goodwill attributable to

Business CGU (Group)

…

4.2

Valuation of defined benefit obligation

of the BT pension scheme (BTPS)

(Group)

çè

4.3

Valuation of unquoted investments in

the BT pension scheme (BTPS) (Group)

4.4

Recoverability of Parent company

investment in subsidiaries (Parent

Company)

çè

4.5

Audit and Risk Committee Interaction

During the year, the ARC met 6 times. KPMG are invited to attend

all ARC meetings and are provided with an opportunity to meet

with the ARC in private sessions without the Executive Directors

being present. For each Key Audit Matter, we have set out

communications with the ARC in section 4, including matters that

required particular judgement for each.

The matters included in the Audit and Risk Committee Chair’s

report on pages 99 to 103 are materially consistent with our

observations of those meetings.

Our Independence

We have fulfilled our ethical responsibilities under, and remain

independent of the Group in accordance with, UK ethical

requirements including the FRC Ethical Standard as applied to

listed public interest entities.

We have not performed any non-audit services during the year

ended 31 March 2024 or subsequently which are prohibited by the

FRC Ethical Standard.

We were first appointed as auditor by the shareholders for the year

ended 31 March 2019. The period of total uninterrupted

engagement is for the 6 financial years ended 31 March 2024.

Jonathan Mills has succeeded John Luke as the Lead Engagement

Partner for the year ended 31 March 2024. The Group

Engagement partner is required to rotate every 5 years. As these

are the first set of the Group’s financial statements signed by

Jonathan Mills, he will be required to rotate off after the FY28

audit.

BT Group plc Annual Report 2024

132 Financial statements

KPMG LLP’s Independent Auditor’s Report to the

members of BT Group plc

The average tenure of partners responsible for component audits

as set out in section 7 below is 3 years, with the shortest being 1

year and the longest being 4 years.

Total audit fee £20.70m

Audit related fees (including interim review) £2.54m

Other services £0.03m

Non-audit fee as a % of total audit and audit

related fee % 12%

Date first appointed 11 July 2018

Uninterrupted audit tenure 6 years

Reappointment 4 years

Next financial period which requires a tender 2029

Tenure of Group engagement partner 1 year

Average tenure of component signing partners 3 years

Materiality (Item 6 below)

The scope of our work is influenced by our view of materiality and

our assessed risk of material misstatement.

Group materiality is determined with reference to a benchmark of

Group Total Revenue (FY23: Profit before tax normalised by

adding back the one-off operating cost arising from the BT Sport

disposal). We have determined overall materiality for the Group

financial statements as a whole at £135m (FY23: £95m) and for

the Parent Company financial statements as a whole at £100m

(FY23: £90m).

A key judgement in determining materiality was selecting the most

relevant metric as the benchmark, considering which metrics have

the greatest bearing on shareholder decisions. The relevant

metrics considered for the current year included Revenue,

Earnings before interest, taxes, depreciation and amortisation

("EBITDA"), Profit before tax from continuing operations

("PBTCO"), and Total assets. The selected benchmark for the

current year is "Revenue," which represents a change from the

prior period where the selected benchmark was PBTCO. The

change to Revenue is deemed appropriate given shareholders’

focus on revenue and cash generation and the current stage of the

Fibre To The Premise (“FTTP”) capital investment program. In the

context of the high levels of capital investment for future growth,

Revenue is considered a more representative and stable measure

of performance. As such, we based our Group materiality on Total

Revenue, of which it represents 0.65% (FY23: 4.95% of normalised

PBTCO).

Materiality for the Parent Company financial statements as a whole

was set at £100m (FY23: £90m), determined with reference to a

benchmark of Parent Company total assets, limited to be less than

materiality for Group materiality as a whole. It represents 0.89%

(FY23: 0.80%) of the stated benchmark.

Materiality levels used in our audit

61.7

4.75

135

87.7

110

100

5.4

FY23 £m FY24 £m

Group

GPM

HCM

PLC

LCM

AMPT

Group Group Materiality

GPM Group Performance Materiality

HCM Highest Component Materiality

PLC Parent Company Materiality

LCM Lowest Component Materiality

AMPT Audit Misstatement Posting Threshold

Group scope (Item 7 below)

We have performed risk assessment and planning procedures to

determine which of the Group’s components are likely to include

risks of material misstatement to the Group financial statements,

the type of procedures to be performed at these components and

the extent of involvement required from our component auditors

around the world.

The total number of entities in scope for FY24 is three which is

consistent with FY23.

The components within the scope of our work accounted for the

percentages illustrated on page 134.

In addition, we have performed Group level analysis on the

remaining components to determine whether further risks of

material misstatement exist in those components.

We consider the scope of our audit, as communicated to the Audit

and Risk Committee, to be an appropriate basis for our audit

opinion.

BT Group plc Annual Report 2024

133 Financial statements

Coverage of Group financial statements

Revenue Total assets

87%

13%

96%

Profit before tax

83%

17%

Full scope audits

Remaining components

The impact of climate change on our audit

In planning our audit, we considered the potential impacts of

climate change on the Group’s business and its financial

statements.

The Group has committed as set out in the Strategic Report to be a

net-zero business by 2030 and has also outlined several shorter-

term climate change targets. As a part of our audit, we have

performed a risk assessment, including enquiries of management,

to understand how the impact of commitments made by the Group

in respect of climate change, as well as the physical and transition

risks of climate change, may affect the financial statements and

our audit.

The potential impacts of these matters relate to the forward-

looking estimates, which include projections for impairment

assessment of goodwill, useful economic life of vehicle fleet and

infrastructure assets impacting on future depreciation charges,

and significant assumptions used in pension asset valuations.

Taking into account our risk assessment procedures, the remaining

useful economic lives of relevant assets and the nature of the

assumptions used in the pension valuation, and the financial

impact of climate risk and opportunities on the forecasted

cashflows, we have assessed that there is not a significant risk to

the balances in the financial statements as a result of climate

change. Therefore, there is no material impact on the Group’s

critical accounting estimates and our key audit matters.

We have read the disclosures of climate related information in the

annual report and considered their consistency with the financial

statements and our audit knowledge. We have not been engaged

to provide assurance over the accuracy of the climate risk

disclosures in the Annual Report.

3. Going concern, viability and principal risks

and uncertainties

The directors have prepared the financial statements on the going

concern basis as they do not intend to liquidate the Group or the

Parent Company or to cease their operations, and they have

concluded that the Group’s and the Parent Company’s financial

position means that this is realistic. They have also concluded that

there are no material uncertainties that could have cast significant

doubt over the Group's ability to continue as a going concern for at

least a year from the date of approval of the financial statements

(“the going concern period”).

Going concern

We used our knowledge of the Group, its industry, and the general

economic environment to identify the inherent risks to its business

model and analysed how those risks might affect the Group’s and

Parent Company’s financial resources or ability to continue

operations over the going concern period. The risks that we

considered most likely to adversely affect the Group’s and Parent

Company’s available financial resources over this period were:

– The impact of rising energy prices, supply shortages, and

inflationary pressures;

– The impact of significant supply chain disruptions driven by geo-

political factors;

– The impact of plans to deliver new initiatives required to meet

savings commitments not being realised;

– The likelihood of existing litigation crystallising within the going

concern period.

We also considered less predictable but realistic second order

impacts, such as a large scale cyber breach, the UK experiencing a

significant recession, adverse changes to telecoms regulation,

which could result in a rapid reduction of available financial

resources.

We considered whether these risks could plausibly affect the

liquidity in the going concern period by comparing severe but

plausible downside scenarios that could arise from these risks

individually and collectively against the level of available financial

resources indicated by the Group’s financial forecasts.

BT Group plc Annual Report 2024

134 Financial statements

KPMG LLP’s Independent Auditor’s Report to the members of BT Group plc continued

Our procedures also included an assessment of whether the going

concern disclosure in note 1 to the financial statements gives a full

and accurate description of the directors’ assessment of going

concern. Accordingly, based on those procedures, we found the

directors’ use of the going concern basis of accounting without any

material uncertainty for the Group and Parent Company to be

acceptable. However, as we cannot predict all future events or

conditions and as subsequent events may result in outcomes that

are inconsistent with judgements that were reasonable at the time

they were made, the above conclusions are not a guarantee that

the Group or the Parent Company will continue in operation.

Our conclusions

– We consider that the directors’ use of the going concern basis of

accounting in the preparation of the Group and Parent

Company’s financial statements is appropriate;

– We have not identified, and concur with the directors’

assessment that there is not, a material uncertainty related to

events or conditions that, individually or collectively, may cast

significant doubt on the Group’s or Parent Company's ability to

continue as a going concern for the going concern period;

– We have nothing material to add or draw attention to in relation

to the directors’ statement in note 1 to the financial statements

on the use of the going concern basis of accounting with no

material uncertainties that may cast significant doubt over the

Group and Parent Company’s use of that basis for the going

concern period, and we found the going concern disclosure in

note 1 to be acceptable; and

– The related statement under the Listing Rules set out on page

126 is materially consistent with the financial statements and our

audit knowledge.

Disclosures of emerging and principal risks and longer-

term viability

Our responsibility

We are required to perform procedures to identify whether there is

a material inconsistency between the directors’ disclosures in

respect of emerging and principal risks and the viability statement,

and the financial statements and our audit knowledge.

Based on those procedures, we have nothing material to add or

draw attention to in relation to:

– the directors’ confirmation within the Viability statement on

page 81 that they have carried out a robust assessment of the

emerging and principal risks facing the Group, including those

that would threaten its business model, future performance,

solvency and liquidity;

– the Principal Risks disclosures describing these risks and how

emerging risks are identified and explaining how they are being

managed and mitigated; and

– the directors’ explanation in the Viability statement of how they

have assessed the prospects of the Group, over what period they

have done so and why they considered that period to be

appropriate, and their statement as to whether they have a

reasonable expectation that the Group will be able to continue in

operation and meet its liabilities as they fall due over the period

of their assessment, including any related disclosures drawing

attention to any necessary qualifications or assumptions.

We are also required to review the Viability statement set out on

page 81 under the Listing Rules.

Our work is limited to assessing these matters in the context of only

the knowledge acquired during our financial statements audit. As

we cannot predict all future events or conditions and as

subsequent events may result in outcomes that are inconsistent

with judgements that were reasonable at the time they were made,

the absence of anything to report on these statements is not a

guarantee as to the Group’s and Parent Company’s longer-term

viability.

Our reporting

We have nothing material to add or draw attention to in relation to

these disclosures.

We have concluded that these disclosures are materially

consistent with the financial statements and our audit knowledge.

4. Key audit matters (KAM)

What we mean

Key audit matters are those matters that, in our professional

judgement, were of most significance in the audit of the financial

statements and include the most significant assessed risks of

material misstatement (whether or not due to fraud) identified by

us, including those which had the greatest effect on:

– the overall audit strategy;

– the allocation of resources in the audit; and

– directing the efforts of the engagement team.

We include below the key audit matters in decreasing order of

audit significance together with our key audit procedures to

address those matters and our results from those procedures.

These matters were addressed, and our results are based on

procedures undertaken, for the purpose of our audit of the

financial statements as a whole. We do not provide a separate

opinion on these matters.

4.1 Accuracy of revenue due to the complex

billing systems (Group)

Financial Statement Elements

FY24 FY23

Total revenue

£20.8bn £20.7bn

Our assessment of risk vs FY23

Increased

Our results

FY24: Acceptable FY23: Acceptable

Description of the Key Audit Matter

Processing error

The Group’s non-long-term contract revenue consists of a large

number of low value transactions. The Group operates a number of

distinct billing and order-entry systems and the IT landscape

underpinning the end-to-end revenue process is complex.

There are multiple products sold at multiple rates with varying

price structures in place. These represent a combination of

service-based products, such as fixed line telephony, as well as

goods, such as the provision of mobile handsets.

The revenue recognition of non-long-term contract revenue is not

subject to significant judgement. However, due to the large

number of transactions, manual nature of order entry and

complexity of the billing systems, this is considered to be an area of

most significance in our audit. Within Business we have identified a

significant risk of processing error in relation to some billing

systems. In addition, the bespoke nature of the pricing structure

within some of Business’ contracts means that there is a higher risk

of processing error and fraud in relation to a proportion of

Business’ revenue derived from certain billing systems.

Subjective estimate of refund liabilities in Business

The bespoke pricing structure results in a risk of billing inaccuracies

within a proportion of Business’ revenue and so over the

identification of financial liabilities for associated customer

refunds. The Group have estimated refund liabilities based on the

BT Group plc Annual Report 2024

135 Financial statements

results of a sample of billing items leading to estimation

uncertainty over the refund liabilities.

The effect of these matters is that, as part of our risk assessment

for audit planning purposes, we determined that the quantum of

refund liabilities had a high degree of estimation uncertainty, with a

potential range of reasonable outcomes greater than our

materiality for the financial statements as a whole. In conducting

our final audit work, we reassessed the degree of estimation

uncertainty to be less than materiality. The financial statements

(note 5) disclose the range estimated by the Group.

Our response to the risk

Our procedures to address the risk included:

Process understanding: Obtaining an understanding of the

revenue processes by observing transactions from customer

initiation to cash received for material revenue streams.

Test of detail: Comparing a sample of revenue transactions,

including credit adjustments, to supporting evidence e.g.,

customer bills, contracts, price lists and cash received (all where

applicable).

Test of detail: Agreeing a sample of year end trade receivables to

cash received after year end.

Test of detail: Within Business, we compared the results of our test

of detail over revenue, including error rates by product, in the

current and previous years’ audits, to the liabilities held for

customer refunds and challenged the Group’s assessment of

refund liabilities based on billing errors identified through our

testing and the legal and regulatory risks in relation to billing errors

for the products impacted.

Assessing transparency: Considering the adequacy of the Group’s

disclosures in respect of the sensitivity of the refund liability to

error rates and legal risks.

We performed the detailed tests above rather than seeking to rely

on the Group’s controls because our knowledge of the design of

these controls, indicated that we would be unlikely to obtain the

required evidence to support reliance on them.

Communications with the Audit and Risk Committee

Our discussions with and reporting to the Audit and Risk

Committee included:

– Our definition of the key audit matter and our audit approach,

including the extent of our planned control reliance.

– The results from our process understanding, including controls

gaps identified.

– The results from our substantive testing. We performed an

assessment of whether the overstatements of revenue identified

through these procedures were material, taking into account

findings from other areas of the audit and qualitative aspects of

the financial statements as a whole.

Areas of particular auditor judgement

We exercised judgement over the adequacy of liabilities for

customer refunds in light of overstatements of revenue identified

through our testing over pricing within Business. Particular

judgement was needed over the applicable error rate and periods

impacted.

Our results

The results of our testing were satisfactory (FY23: satisfactory) and

we considered the revenue relating to non-long-term contract

revenue and the estimate of refund liabilities and related

disclosures to be acceptable (FY23: acceptable).

Further information in the Annual Report and Accounts: Refer

to page 156 for the accounting policy on Revenue (note 5)

for the financial disclosures.

4.2 Impairment of goodwill attributable to the

Business CGU (Group)

Financial Statement Elements

FY24 FY23

Goodwill allocated to Business CGU

£3.56bn £4.08bn

Impairment charge

£0.49bn £0.0bn

Our assessment of risk vs FY23

…

Our results

FY24: Acceptable FY23: Acceptable

Description of the Key Audit Matter

Forecast-based assessment

The recoverability of goodwill allocated to the Business cash

generating unit (“CGU”) is assessed using value in use which is

based on forecast future cash flows, within a discounted cashflow

model.

For the Business CGU, the execution risk associated with the

transition from legacy to next generation telecommunication

products and services in conjunction with ongoing cost reductions

and uncertainty in relation to the economic outlook renders

precise forecasting of the underlying cash flows challenging. There

is also estimation uncertainty over the appropriate terminal growth

rate and discount rate applied to the projected cashflows.

In the current year the Group recognised an impairment charge

against goodwill allocated to the Business CGU of £488mn

(FY23:nil), reflecting the execution risk of the CGU’s business

planand increased uncertainty over the projected cashflows.

The effect of these matters is that, as part of our risk assessment,

we determined that the value in use used to support the

recoverable amount of the goodwill allocated to the Business CGU

has a high degree of estimation uncertainty, with a potential range

of reasonable impairment outcomes greater than our materiality

for the financial statements as a whole, and possibly many times

that amount. The financial statements (note13) disclose the

sensitivity estimated by the Group.

Our response to the risk

Our procedures to address the risk included:

Our valuation expertise: Using our own valuation specialists,

assessing the methodology, principles and integrity of the value in

use model.

Benchmarking assumptions: Challenging the appropriateness of

the Business CGU discount rate and long-term growth rate by

determining an independent discount rate and benchmarking the

long term growth rate against externally derived data and analyst

reports.

Our sector experience: Using our sector experience inspecting the

Group’s medium term strategic plans used to derive the forecast

cash flows and comparing the assumptions applied by the directors

in the forecast cash flows against those plans, and the forecasts

approved by the Board.

Assessing consistency: Assessing the consistency of the forecasts

used by the Group across different areas such as goodwill

impairment testing and the viability assessment.

BT Group plc Annual Report 2024

136 Financial statements

KPMG LLP’s Independent Auditor’s Report to the members of BT Group plc continued

Historical comparison: Assessing the historical accuracy of the

forecasts used in the Business CGU’s impairment model by

considering actual performance against prior year budgets and

challenging whether the forecast cashflows were risk adjusted

based on the downside risks and opportunities identified by the

Group.

Sensitivity analysis: Considering the sensitivity of the recoverable

amount to reasonably possible changes in the key inputs and

assumptions used in determining the value in use of the Business

CGU and the resulting impairment charge including the impact of

changes in EBITDA compound annual growth rate in the forecast

period, long term growth rate and discount rate.

Comparing valuations: Performing a stand back assessment by

comparing the combined value in use of all of the CGUs of the

Group to the Group’s market capitalisation to assess the

reasonableness of those cash flows and assessing and challenging

the difference and whether the assumptions applied in the

impairment test were acceptable.

Assessing transparency: Assessing whether the Group’s

disclosures about the sensitivity of the outcome of the impairment

assessment to changes in key assumptions reflected the risks

inherent in the recoverable amount of goodwill.

We performed the detailed tests above rather than seeking to rely

on any of the Group’s controls because the nature of the balance is

such that we would expect to obtain audit evidence primarily

through the detailed procedures described.

Communications with the Audit and RiskCommittee

Our discussions with and reporting to the Audit and Risk

Committee included:

– Our definition of the key audit matter relating to the impairment

of goodwill allocated to the Business CGU.

– Our audit response to the key audit matter which included our

assessment of the forecasted cashflows and the use of

specialists to challenge the value in use model and key

assumptions and our assessment over accuracy and

completeness of the disclosures.

Areas of particular auditor judgement

We identified the following as the areas of particular auditor

judgement:

– Subjective and complex auditor judgement was required in

evaluating the key assumptions included in the estimation of the

value in use. This includes the quantum of risk adjustments

needed to be applied to forecasts to account for the underlying

execution risk associated with the transition from legacy to next

generation products and services, in conjunction with an

ongoing project to reduce the CGU’s cost base to deliver those

products and services. This is in addition to the evaluation of the

terminal growth rate and discount rate.

– We performed an assessment of whether an understatement of

the impairment charge identified through these procedures was

material.

Our results

We found the goodwill allocated to the Business CGU balance, and

the related impairment charge, to be acceptable (FY23:

acceptable.

Further information in the Annual Report and Accounts: See

the Audit and Risk Committee Report on page 101 for details

on how the Audit and Risk Committee considered impairment

of goodwill as an area of significant attention, page 168 for

the accounting policy on Impairment on goodwill (note 13)

for the financial disclosures.

4.3 Valuation of defined benefit obligation of

the BT Pension Scheme (BTPS) (Group)

Financial Statement Elements

FY24 FY23

BTPS Obligation

£40.0bn £41.6bn

Our assessment of risk vs FY23

çè

Our results

FY24: Acceptable FY23: Acceptable

Description of the Key Audit Matter

Subjective valuation

The valuation of the BT pension scheme (“BTPS”) defined benefit

obligation is complex and requires a significant degree of

estimation in determining the assumptions. It is dependent on key

actuarial assumptions, including the discount rate, retail price

index (“RPI”) and mortality assumptions. A change in the

methodology applied or small changes in the key actuarial

assumptions may have a significant impact on the measurement of

the defined benefit pension obligation.

The effect of these matters is that, as part of our risk assessment,

we determined the valuation of the BTPS defined benefit

obligation had a high degree of estimation uncertainty, with a

potential range of reasonable outcomes greater than our

materiality for the financial statements as a whole, and possibly

many times that amount. The financial statements (note 19)

disclose the key sensitivities of the defined benefit pension

obligation to changes in key assumptions.

Our response to the risk

Our procedures to address the risk included:

Evaluation of the Group’s experts: Evaluating the scope,

competency and objectivity of the Group’s external experts who

assisted in determining the actuarial assumptions used to

determine the defined benefit obligation.

Our actuarial expertise: With the support of our own actuarial

specialists, we performed the following:

– Evaluating the judgements made and the appropriateness of

methodologies used by the Group and the Group’s experts in

determining the key actuarial assumptions;

– Comparing the assumptions used by the Group to our

independently compiled expected ranges based on market

observable data points and our market experience.

Assessing transparency: Considering the adequacy of the Group’s

disclosures in respect of the sensitivity of the obligation to these

assumptions.

We performed the tests above rather than seeking to rely on any of

the Group’s controls because the nature of the balance is such that

we would expect to obtain audit evidence primarily through the

detailed procedures described.

BT Group plc Annual Report 2024

137 Financial statements

Communications with the Audit and RiskCommittee

Our discussions with and reporting to the Audit and Risk

Committee included:

– Our definition of the key audit matter relating to the valuation of

the defined benefit obligation of the BTPS.

– Our audit response to the key audit matter which included the

use of specialists to challenge key aspects of the Group’s

actuarial valuation.

Areas of particular auditor judgement

We identified the following as the areas of particular auditor

judgement:

– Subjective and complex auditor judgement was required in

evaluating the key actuarial assumptions used by the Group

(including the discount rate, retail price index and mortality

assumptions).

Our results

We found the valuation of the defined benefit obligation of the BT

Pension Scheme and related disclosures to be acceptable (FY23:

acceptable).

Further information in the Annual Report and Accounts: See

the Audit and Risk Committee Report on page 101 for details

on how the Audit and Risk Committee considered the

valuation of defined benefit obligation of the BTPS as an area

of significant attention, page 185 for the accounting policy on

the Retirement Benefit Plan (note 19) for the financial

disclosures.

4.4 Valuation of unquoted assets in the BT

Pension Scheme (BTPS) (Group)

Financial Statement Elements

FY24 FY23

Longevity Insurance Contract for the

BTPS: included within the unquoted

BTPS plan assets

£(0.9)bn £(0.8)bn

Our assessment of risk vs FY23

Our results

FY24: Acceptable FY23: Acceptable

Description of the Key Audit Matter

Subjective valuation

The BTPS have unquoted plan assets in private equity, UK and

overseas property, mature infrastructure, longevity insurance

contracts, secure income and non-core credit assets which are

classified as fair value level three assets.

Significant judgement is required to determine the value of a

portion of these unquoted investments, which are valued based on

inputs that are not directly observable. The Group engages

valuation experts to value these assets.

In FY24, the most significant valuation judgement of the above is in

respect of a longevity insurance contract. The key unobservable

inputs used to determine the fair value of that longevity insurance

contract include the discount rate and projected future mortality.

The effect of these matters is that, as part of our risk assessment,

we determined that the valuation of a longevity insurance contract

asset held by the BTPS has a high degree of estimation

uncertainty, with a potential range of reasonable outcomes greater

than our materiality for the financial statements as a whole, and

possibly many times that amount.

The financial statements (note 19) disclose the key sensitivities of

the valuation of plan assets to changes in key assumptions.

Our response to the risk

Our procedures to address the risk included:

Assessing valuers’ credentials: Evaluating the scope,

competencies and objectivity of the Group’s external experts who

assisted in determining the key unobservable inputs and the

valuation of a longevity insurance contract.

Comparing valuations: Challenging, with the support of our own

actuarial specialists, the fair value of a longevity insurance contract

by comparing with an independently developed range of fair

values using assumptions, such as the discount rate and projected

future mortality, based on external data. External data included

market views of the impact from COVID on future mortality,

market discount rates and the demographic analysis available from

the 30 June 2023 triennial funding valuation.

Assessing transparency: Considering the adequacy of the Group’s

disclosures in respect of the sensitivity of a longevity insurance

contract asset valuation to these assumptions.

We performed the detailed tests above rather than seeking to rely

on any of the Group's controls because our knowledge of the

design of these controls indicated that we would not be able to

obtain the required evidence to support reliance on controls.

BT Group plc Annual Report 2024

138 Financial statements

KPMG LLP’s Independent Auditor’s Report to the members of BT Group plc continued

Communications with the Audit and RiskCommittee

Our discussions with and reporting to the Audit and Risk

Committee included:

– Our definition of the key audit matter relating to the valuation of

a longevity insurance contract.

– Our audit response to the key audit matter which included the

use of specialists to challenge key aspects of the Group’s

valuation of a longevity insurance contract.

Areas of particular auditor judgement

We identified the following as the areas of particular auditor

judgement:

– Subjective and complex auditor judgement was required in

evaluating the key assumptions used by the Group (including

the discount rate and projected mortality)

Our results

We found the valuation of a longevity insurance contract and

related disclosures to be acceptable (FY23: acceptable).

Further information in the Annual Report and Accounts: See

the Audit and Risk Committee Report on page 101 for details

on how the Audit and Risk Committee considered the

valuation of unquoted investments in the BTPS (including the

longevity insurance contract) as an area of significant

attention, page 185 for the accounting policy on Retirement

benefit plans (note 19) for the financial disclosures.

4.5 Recoverability of Parent company investment

in subsidiaries

Financial Statement Elements

FY24 FY23

Investment in subsidiary

£11.3bn £11.3bn

Our assessment of risk vs FY23

çè

Our results

FY24: Acceptable FY23: Acceptable

Description of the Key Audit Matter

Low risk, high value

The carrying amount of the Parent company investment in

subsidiary represents 100% (FY23: 100%), of the Parent

company’s total assets.

The recoverability is not at a high risk of significant misstatement

or subject to significant judgement. However, due to their

materiality in the context of the Parent company financial

statements, this is considered to be the area that had the greatest

effect on our overall Parent company audit.

Our response to the risk

Our procedures to address the risk included:

Test of detail: Comparing the carrying amount of the Parent

company’s investment with the calculated value in use of the

investment.

Comparing valuations: Comparing the carrying amount of the

Parent company’s investment with the market capitalisation of

theGroup.

We performed the tests above rather than seeking to rely on any of

the Parent company’s controls because the nature of the balance

is such that we would expect to obtain audit evidence primarily

through the detailed procedures described.

Communications with the Audit and RiskCommittee

Our discussions with and reporting to the Audit and Risk

Committee included:

– Our definition of the key audit matter and our findings along with

the procedures performed to address the corresponding risk.

– The result of our substantive testing.

Areas of particular auditor judgement

We did not identify any areas of particular auditor judgement.

Our results

We found the Parent company’s conclusion that there is no

impairment of its investment in subsidiary to be acceptable (FY23:

acceptable).

Further information in the Annual Report and Accounts: Refer

to page 224 for the accounting policy on Investments in

Subsidiaries Undertakings.

We continue to perform procedures over the ongoing

measurement of balances held in relation to BT’s investment in the

Sports JV. However, in FY23 all significant risks were associated

with the disposal accounting and subsequent re-investment in the

Sports JV related to the initial recognition of balances. We have

concluded there are no significant risks over the subsequent

measurement of these balances in FY24 and therefore we have not

identified a related KAM in our audit report in FY24.

5. Our ability to detect irregularities, and our

response

Fraud – Identifying and responding to risks of material

misstatement due to fraud

Fraud risk assessment

To identify risks of material misstatement due to fraud (“fraud

risks”) we assessed events or conditions that could indicate an

incentive or pressure to commit fraud or provide an opportunity to

commit fraud. Our risk assessment procedures included:

– enquiring of directors, the Audit and Risk Committee, internal

audit and inspection of policy documentation as to the Group’s

high-level policies and procedures to prevent and detect fraud,

including the internal audit function, and the Group’s channel for

“whistleblowing”, as well as whether they have knowledge of any

actual, suspected or alleged fraud;

– reading Board, Remuneration Committee and Executive

Committee minutes;

– considering remuneration incentive schemes and performance

targets for management and directors including the targets for

management remuneration;

– using analytical procedures to identify any unusual or

unexpected relationships.

Risk communications

We communicated identified fraud risks throughout the audit

team and remained alert to any indications of fraud throughout the

audit. This included communication from the Group to full scope

component audit teams of relevant fraud risks identified at the

Group level and request to full scope component audit teams to

report to the Group audit team any instances of fraud that could

give rise to a material misstatement at the Group level.

BT Group plc Annual Report 2024

139 Financial statements

Fraud risks

As required by auditing standards and taking into account possible

pressures to meet profit targets, recent revisions to guidance and

our overall knowledge of the control environment, we perform

procedures to address the risk of management override of

controls, and the risk of fraudulent revenue recognition in relation

to certain revenue streams in Business, in particular:

– the risk that Group and component management may be in a

position to make inappropriate accounting entries; and

– the risk that certain revenue streams in Business are overstated

given the bespoke nature of the pricing structure within these

contracts and associated risk of processing errors.

Procedures to address fraud risks

In determining the audit procedures, we took into account the

results of our evaluation and test of operating effectiveness of

some of the Group-wide fraud risk management controls.

We also performed procedures including:

– Identifying journal entries to test for all full scope components

based on high risk criteria and comparing the identified entries

to supporting documentation. These included those posted by

senior finance management, those posted and approved by the

same user and those posted to unusual or seldom used accounts;

– Assessing whether the judgements made in making accounting

estimates are indicative of a potential bias;

– Increased testing over certain revenue streams in Business.

– Evaluating the business purpose for significant unusual

transactions.

Laws and regulations – Identifying and responding to

risks of material misstatement relating to compliance

with laws and regulations

Laws and regulations risk assessment

We identified areas of laws and regulations that could reasonably

be expected to have a material effect on the financial statements

from our general commercial and sector experience, through

discussion with the directors and other management (as required

by auditing standards), and from inspection of the Group’s

regulatory and legal correspondence and discussed with the

directors and other management the policies and procedures

regarding compliance with laws and regulations.

As the Group is regulated, our assessment of risks involved gaining

an understanding of the control environment including the Group’s

procedures for complying with regulatory requirements.

Risk communications

We communicated identified laws and regulations throughout our

team and remained alert to any indications of non-compliance

throughout the audit. This included communication from the

Group to full-scope component audit teams of relevant laws and

regulations identified at the Group level, and a request for full

scope component auditors to report to the Group audit team any

instances of non-compliance with laws and regulations that could

give rise to a material misstatement at the Group level.

The potential effect of these laws and regulations on the financial

statements varies considerably.

Direct laws context and link to audit

Firstly, the Group is subject to laws and regulations that directly

affect the financial statements including financial reporting

legislation (including related companies legislation), distributable

profits legislation, taxation legislation, and pension legislation and

we assessed the extent of compliance with these laws and

regulations as part of our procedures on the related financial

statement items.

Most significant indirect law/ regulation areas

Secondly, the Group is subject to many other laws and regulations

where the consequences of non-compliance could have a material

effect on amounts or disclosures in the financial statements, for

instance through the imposition of fines or litigation or the loss of

the Group’s licence to operate. We identified the following areas as

those most likely to have such an effect: anti-bribery, regulations

affecting telecommunication providers, and certain aspects of

company legislation recognising the financial and regulated nature

of the Group’s activities (including compliance with Ofcom

regulation) and its legal form.

Auditing standards limit the required audit procedures to identify

non-compliance with these laws and regulations to enquiry of the

directors and other management and inspection of regulatory and

legal correspondence, if any. Therefore if a breach of operational

regulations is not disclosed to us or evident from relevant

correspondence, an audit will not detect that breach.

Known actual or suspected matters

For the legal matters discussed in note 18 we assessed disclosures

against our understanding from legal correspondence.

Significant actual or suspected breaches discussed

withAudit and Risk Committee

We discussed with the Audit and Risk Committee other matters

related to actual or suspected breaches of laws or regulations, for

which disclosure is not necessary, and considered any implications

for our audit.

Context

Context of the ability of the audit to detect fraud or

breaches of law or regulation

Owing to the inherent limitations of an audit, there is an

unavoidable risk that we may not have detected some material

misstatements in the financial statements, even though we have

properly planned and performed our audit in accordance with

auditing standards. For example, the further removed non-

compliance with laws and regulations is from the events and

transactions reflected in the financial statements, the less likely the

inherently limited procedures required by auditing standards

would identify it. In addition, as with any audit, there remained a

higher risk of non-detection of fraud, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the

override of internal controls. Our audit procedures are designed to

detect material misstatement. We are not responsible for

preventing non-compliance or fraud and cannot be expected to

detect non-compliance with all laws and regulations.

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KPMG LLP’s Independent Auditor’s Report to the members of BT Group plc continued

6. Our determination of materiality

The scope of our audit was influenced by our application of

materiality. We set quantitative thresholds and overlay qualitative

considerations to help us determine the scope of our audit and the

nature, timing and extent of our procedures, and in evaluating the

effect of misstatements, both individually and in the aggregate, on

the financial statements as a whole.

£135m (FY23: £95m)

Materiality for the Group financial statements as awhole

What we mean

A quantitative reference for the purpose of planning and

performing our audit.

Basis for determining materiality and judgements applied

Materiality for the Group financial statements as a whole was set at

£135m (FY23: £95m). This was determined with reference to a

benchmark of Total Revenue (of which it represents 0.65% (FY23:

4.95% of normalised PBTCO)).

A key judgement in determining materiality was selecting the most

relevant metric as the benchmark, considering which metrics have

the greatest bearing on shareholder decisions. The relevant

metrics considered for the current year included Revenue,

Earnings before interest, taxes, depreciation and amortisation

(“EBITDA”), Profit before tax from continuing operations

(“PBTCO”), and Total assets. The selected benchmark for the

current year is "Revenue," which represents a change from the

prior period where the selected benchmark was PBTCO. The

change to Revenue is deemed appropriate given shareholders'

focus on revenue and cash generation and the current stage of the

Fibre To The Premise (“FTTP”) capital investment program. In the

context of the high levels of capital investment for future growth,

Revenue is considered a more representative and stable measure

of performance.

Our Group materiality of £135m was determined by applying a

percentage to the Total Revenue. When using a benchmark of

Total Revenue to determine overall materiality, KPMG’s approach

for listed entities considers a guideline range 0.5% – 1% of the

measure. In setting overall Group materiality, we applied a

percentage of 0.65% (FY23: 4.95% of normalised PBTCO) to the

benchmark.

Materiality for the Parent company financial statements as a whole

at £100m (FY23: £90m), determined with reference to a

benchmark of Parent Company total assets, limited to be less than

materiality for Group materiality as a whole. It represents 0.89%

(FY23: 0.80%) of the stated benchmark.

£87.7m (FY23: £61.7m)

Performance materiality

What we mean

Our procedures on individual account balances and disclosures

were performed to a lower threshold, performance materiality, so

as to reduce to an acceptable level the risk that individually

immaterial misstatements in individual account balances add up to

a material amount across the financial statements as a whole.

Basis for determining performance materiality and

judgements applied

We have considered performance materiality at a level of 65%

(FY23: 65%) of materiality for BT Group plc’s Group financial

statements as a whole to be appropriate.

The Parent company performance materiality was set at £65m

(FY23: £58.5m), which equates to 65% (FY23: 65%) of materiality

for the Parent company financial statements as a whole.

We applied this percentage in our determination of performance

materiality based on the level of identified misstatements and

control deficiencies during the year and the prior year.

£5.4m (FY23: £4.75m)

Audit misstatement posting threshold

What we mean

This is the amount below which identified misstatements are

considered to be clearly trivial from a quantitative point of view.

We may become aware of misstatements below this threshold

which could alter the nature, timing and scope of our audit

procedures, for example if we identify smaller misstatements

which are indicators of fraud.

This is also the amount above which all misstatements identified

are communicated to BT Group plc’s Audit and Risk Committee.

Basis for determining the audit misstatement posting

threshold and judgements applied

We set our audit misstatement posting threshold at 4% (FY23:

5%) of our materiality for the Group financial statements. We also

report to the Audit and Risk Committee any other identified

misstatements that warrant reporting on qualitative grounds.

The overall materiality for the Group financial statements of

£135m (FY23: £95m) compares as follows to the main financial

statement caption amounts:

BT Group plc Annual Report 2024

141 Financial statements

Total Group Revenue

FY24 FY23

Financial statement Caption

£20,797m £20,681m

Group Materiality as % of caption

0.65% 0.46%

Group Profit Before Tax

FY24 FY23

Financial statement Caption

£1,186m £1,729m

Group Materiality as % of caption

11.38% 5.49%

Total Group Assets

FY24 FY23

Financial statement Caption

£51,739m £52,752m

Group Materiality as % of caption

0.26% 0.18%

7. The scope of our audit

Group scope

What we mean

How the Group audit team determined the procedures to be performed across the Group.

The Group has 215 (FY23: 226) reporting components. In order to determine the work performed at the reporting component level, we

identified those components which we considered to be of individual financial significance, those which were significant due to risk and

those remaining components on which we required procedures to be performed to provide us with the evidence we required in order to

conclude on the Group financial statements as a whole.

We determined individually financially significant components as those contributing at least 10% (FY23: 10%) of revenue or total assets.

We selected revenue and total assets because these are the most representative of the relative size of the components. We identified 2

(FY23: 2) components as individually financially significant components and performed full scope audits on these components.

We selected 1 (FY23: 1) components for which we performed work other than audits for Group reporting purposes, that was not

individually significant but were included in the scope of our Group reporting work in order to provide further coverage over the Group's

results.

The components within the scope of our work accounted for the following percentages of the Group’s results, with the prior year

comparatives indicated in brackets:

Scope

Number of

components

Range of materiality

applied Group Revenue Group PBT Group Total assets

Full scope audit 2 (2)

£90m – £110m

(£60m – £80m) 87% (86%) 83% (78%) 96% (90%)

Specified audit procedure 1(1) £50m (£35m) 0% (0%) 10%* (11%) 0% (0%)

*as a % of Total operating cost

For the residual components, we performed analysis at an aggregated Group level to re-examine our assessment that there were no

significant risks of material misstatement within those.

The work on 1 of the 3 in scope components (FY23: 1 of the 3 in scope components) was performed by component auditors and the rest,

including the audit of the Parent company, was performed by the Group audit team.

The Group audit team has also performed audit procedures on the following areas on behalf of the components:

– Testing of IT Systems

– Litigation and claims

These items were audited by the Group team for efficiency purposes, where the Group team has direct access to the underlying

information. The Group team communicated the results of these procedures to the component teams.

The Group team instructed component auditors as to the significant areas to be covered, including the relevant risks detailed above and

the information to be reported back. The Group team approved the component materialities, as detailed in the table above, having regard

to the mix of size and risk profile of the Group across the components.

The scope of the audit work performed was predominately substantive as we placed limited reliance upon the Group’s internal control

over financial reporting.

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142 Financial statements

KPMG LLP’s Independent Auditor’s Report to the members of BT Group plc continued

Group audit team oversight

What we mean

The extent of the Group audit team’s involvement in component

audits.

In working with component auditors, we:

– Held planning calls with component audit teams to discuss the

significant areas of the audit relevant to the components;

– Issued Group audit instructions to component auditors on the

scope of their work,

– Held risk assessment update discussions with component audit

teams before the commencement of the final phases of the

audit led by the Group engagement partner and engagement

quality control partner;

– Inspected component audit teams’ key work papers (in person

and/or using remote technology capabilities) to evaluate the

quality of execution of the audits of the components.

8. Other information in the annual report

The directors are responsible for the other information presented

in the Annual Report together with the financial statements. Our

opinion on the financial statements does not cover the other

information and, accordingly, we do not express an audit opinion

or, except as explicitly stated below, any form of assurance

conclusion thereon.

All other information

Our responsibility

Our responsibility is to read the other information and, in doing so,

consider whether, based on our financial statements audit work,

the information therein is materially misstated or inconsistent with

the financial statements or our audit knowledge.

Our reporting

Based solely on that work we have not identified material

misstatements or inconsistencies in the other information.

Strategic report and directors’ report

Our responsibility and reporting

Based solely on our work on the other information described above

we report to you as follows:

– we have not identified material misstatements in the strategic

report and the directors’ report;

– in our opinion the information given in those reports for the

financial year is consistent with the financial statements; and

– in our opinion those reports have been prepared in accordance

with the Companies Act 2006.

Directors’ remuneration report

Our responsibility

We are required to form an opinion as to whether the part of the

Directors’ Remuneration Report to be audited has been properly

prepared in accordance with the Companies Act 2006.

Our reporting

In our opinion the part of the Directors’ Remuneration Report to be

audited has been properly prepared in accordance with the

Companies Act 2006.

Corporate governance disclosures

Our responsibility

We are required to perform procedures to identify whether there is

a material inconsistency between the financial statements and our

audit knowledge, and:

– the directors’ statement that they consider that the annual

report and financial statements taken as a whole is fair, balanced

and understandable, and provides the information necessary for

shareholders to assess the Group’s position and performance,

business model and strategy;

– the section of the annual report describing the work of the Audit

and Risk Committee, including the significant matters that the

Audit and Risk Committee considered in relation to the financial

statements, and how these issues were addressed; and

– the section of the annual report that describes the review of the

effectiveness of the Group’s risk management and internal

control systems.

We are also required to review the part of the Corporate

Governance Statement relating to the Group’s compliance with

the provisions of the UK Corporate Governance Code specified by

the Listing Rules for our review.

Our reporting

Based on those procedures, we have concluded that each of these

disclosures is materially consistent with the financial statements

and our audit knowledge.

We have nothing to report in this respect.

Other matters on which we are required to report by

exception

Our responsibility

Under the Companies Act 2006, we are required to report to you if,

in our opinion:

– adequate accounting records have not been kept by the Parent

company, or returns adequate for our audit have not been

received from branches not visited by us; or

– the Parent company financial statements and the part of the

Directors’ Remuneration Report to be audited are not in

agreement with the accounting records and returns; or

– certain disclosures of directors’ remuneration specified by law

are not made; or

– we have not received all the information and explanations we

require for our audit.

Our reporting

We have nothing to report in these respects.

9. Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 125, the

directors are responsible for: the preparation of the financial

statements including being satisfied that they give a true and fair

view; such internal control as they determine is necessary to enable

the preparation of financial statements that are free from material

misstatement, whether due to fraud or error; assessing the Group

and Parent company’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern; and

using the going concern basis of accounting unless they either

intend to liquidate the Group or the Parent company or to cease

operations, or have no realistic alternative but to do so.

BT Group plc Annual Report 2024

143 Financial statements

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether

the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue our

opinion in an auditor’s report. Reasonable assurance is a high level

of assurance, but does not guarantee that an audit conducted in

accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in aggregate,

they could reasonably be expected to influence the economic

decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s

website at www.frc.org.uk/auditorsresponsibilities.

The Company is required to include these financial statements in

an annual financial report prepared under Disclosure Guidance and

Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report

provides no assurance over whether the annual financial report has

been prepared in accordance with those requirements.

10. The purpose of our audit work and to whom we

owe our responsibilities

This report is made solely to the Company’s members, as a body, in

accordance with Chapter 3 of Part 16 of the Companies Act 2006.

Our audit work has been undertaken so that we might state to the

Company’s members those matters we are required to state to

them in an auditor’s report and for no other purpose. To the fullest

extent permitted by law, we do not accept or assume responsibility

to anyone other than the Company and the Company’s members,

as a body, for our audit work, for this report, or for the opinions we

have formed.

Jonathan Mills

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square

London

E14 5GL

15 May 2024

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144 Financial statements

KPMG LLP’s Independent Auditor’s Report to the members of BT Group plc continued

		Before
		specificitems	Specific	Total
			a
		(‘Adjusted’)	items	(Reported)
	Notes	£m	£m	£m
Revenue	4, 5	20,835	(38)	20,797
Operating costs	6	(17,634)	(949)	(18,583)
Of which net impairment losses on trade receivables and contract assets		(165)	—	(165)
Of which goodwill impairment	13	—	(488)	(488)
Operating profit (loss)	4	3,201	(987)	2,214
Finance expense	27	(1,067)	(121)	(1,188)
Finance income		181	—	181
Net finance expense		(886)	(121)	(1,007)
Share of post tax profit (loss) of associates and joint ventures	24	(21)	—	(21)
Profit (loss) before taxation		2,294	(1,108)	1,186
Taxation	10	(476)	145	(331)
Profit (loss) for the year		1,818	(963)	855
Earnings per share	11
Basic		18.5p	(9. 8) p	8.7p
Diluted		18.2p	(9. 6) p	8.6p

Group income statement

Year ended 31 March 2023

		Before
		specificitems	Specific	Total
		(‘Adjusted’)	items	(Reported)
	Notes	£m	£m	£m
Revenue	4, 5	20,669	12	20,681
Operating costs	6	(17,494)	(568)	(18,062)
Of which net impairment losses on trade receivables and contract assets		(138)	—	(138)
Of which goodwill impairment	13	—	—	—
Operating profit (loss)	4	3,175	(556)	2,619
Finance expense	27	(889)	(5)	(894)
Finance income		63	—	63
Net finance expense		(826)	(5)	(831)
Share of post tax profit (loss) of associates and joint ventures	24	(59)	—	(59)
Profit (loss) before taxation		2,290	(561)	1,729
Taxation	10	(132)	308	176
Profit (loss) for the year		2,158	(253)	1,905
Earnings per share	11
Basic		22.0p	(2.6) p	19.4p
Diluted		21.4p	(2.5) p	18.9p

a Specific items are defined and analysed in note 9.

BT Group plc Annual Report 2024

145 Financial statements

Group income statement

Year ended 31 March 2024

		2024	2023
	Notes	£m	£m
Profit for the year		855	1,905
Other comprehensive income (loss)
Items that will not be reclassified to the income statement
Remeasurements of the net pension obligation	19	(2,444)	(2,876)
Tax on pension remeasurements	10	600	732
Items that have been or may be reclassified to the income statement
Exchange differences on translation of foreign operations	29	(66)	87
Fair value movements on assets at fair value through other comprehensive income	29	—	(3)
Movements in relation to cash flow hedges:
– net fair value gains (losses)	29	(642)	1,055
– recognised in income and expense	29	356	(713)
Tax on components of other comprehensive income that have been or may be reclassified	10, 29	78	(90)
Share of post tax other comprehensive loss in associates and joint ventures	24	(11)	(1)
Other comprehensive (loss) income for the year, net of tax		(2,129)	(1,809)
Total comprehensive (loss) income for the year		(1,274)	96

BT Group plc Annual Report 2024

146 Financial statements

Group statement of comprehensive income

Year ended 31 March

		2024	2023
	Notes	£m	£m
Non-current assets
Intangible assets	13	12,920	13,687
Property, plant and equipment	14	22,562	21,667
Right-of-use assets	15	3,642	3,981
Derivative financial instruments	28	1,020	1,397
Investments	23	29	29
Joint ventures and associates	24	307	359
Trade and other receivables	16	641	503
Preference shares in joint ventures	24	451	542
Contract assets	5	330	369
Retirement benefit surplus	19	70	52
Deferred tax assets	10	1,048	709
		43,020	43,295
Current assets
Inventories		409	349
Trade and other receivables	16	3,565	3,060
Preference shares in joint ventures	24	82	13
Contract assets	5	1,410	1,565
Assets classified as held for sale	22	—	21
Current tax receivable		423	427
Derivative financial instruments	28	50	82
Investments	23	2,366	3,548
Cash and cash equivalents	25	414	392
		8,719	9,457
Current liabilities
Loans and other borrowings	26	1,395	1,772
Derivative financial instruments	28	94	86
Trade and other payables	17	6,327	6,564
Contract liabilities	5	906	859
Lease liabilities	15	766	800
Liabilities classified as held for sale	22	—	4
Current tax liabilities		92	78
Provisions	18	238	229
		9,818	10,392
Total assets less current liabilities		41,921	42,360
Non-current liabilities
Loans and other borrowings	26	17,131	16,749
Derivative financial instruments	28	445	297
Contract liabilities	5	175	193
Lease liabilities	15	4,189	4,559
Retirement benefit obligations	19	4,882	3,139
Other payables	17	637	920
Deferred tax liabilities	10	1,533	1,620
Provisions	18	411	369
		29,403	27,846
Equity
Share capital		499	499
Share premium		1,051	1,051
Own shares	20	(311)	(422)
Merger reserve		998	998
Other reserves	29	716	957
Retained earnings		9,565	11,431
Total equity		12,518	14,514
		41,921	42,360

The consolidated financial statements on pages 145 to 221 were approved by the Board of Directors on 15 May 2024 and were signed on

its behalf by:

Adam Crozier Allison Kirkby Simon Lowth

Chairman Chief Executive Chief Financial Officer

BT Group plc Annual Report 2024

147 Financial statements

Group balance sheet

At 31 March

							Retained	Total
		Share	Share	Own	Merger	Other	earnings	equity
		a	b	c		d e
		capital	premium	shares	reserve	reserves	(loss)	(deficit)
	Notes	£m	£m	£m	£m	£m	£m	£m
At 1 April 2022		499	1,051	(274)	998	619	12,391	15,284
Profit for the year		—	—	—	—	—	1,905	1,905
Other comprehensive income		—	—	—	—	1,141	(2,879)	(1,738)
(loss) – before tax
Tax on other comprehensive income (loss)	10	—	—	—	—	(90)	732	642
Transferred to the income		—	—	—	—	(713)	—	(713)
statement
Total comprehensive income		—	—	—	—	338	(242)	96
(loss) for the year
Dividends to shareholders	12	—	—	—	—	—	(753)	(753)
Share-based payments	21	—	—	—	—	—	80	80
Tax on share-based payments	10	—	—	—	—	—	(9)	(9)
Net buyback of own shares	20	—	—	(148)	—	—	(34)	(182)
Other movements		—	—	—	—	—	(2)	(2)
At 31 March 2023		499	1,051	(422)	998	957	11,431	14,514
Profit for the year		—	—	—	—	—	855	855
Other comprehensive income		—	—	—	—	(708)	(2,455)	(3,163)
(loss) – before tax
Tax on other comprehensive income (loss)	10	—	—	—	—	78	600	678
Transferred to the income		—	—	—	—	356	—	356
statement
Total comprehensive income		—	—	—	—	(274)	(1,000)	(1,274)
(loss) for the year
Dividends to shareholders	12	—	—	—	—	—	(757)	(757)
Share-based payments	21	—	—	—	—	—	71	71
Tax on share-based payments	10	—	—	—	—	—	(12)	(12)
Net buyback of own shares	20	—	—	111	—	—	(137)	(26)
Transfer to realised profit		—	—	—	—	33	(33)	—
Other movements		—	—	—	—	—	2	2
At 31 March 2024		499	1,051	(311)	998	716	9,565	12,518

a The allotted, called up, and fully paid ordinary share capital of BT Group plc at 31 March 2024 was £499m comprising 9,968,127,681 ordinary shares of 5p each (31 March 2023:

£499m comprising 9,968,127,681 ordinary shares of 5p each).

b The share premium account, comprising the premium on allotment of shares, is not available for distribution.

c For further analysis of own shares, see note 20.

d The merger reserve balance at 1 April 2022 includes £998m related to the group reorganisation that occurred in November 2001 and represented the difference between the

nominal value of shares in the new parent company, BT Group plc, and the aggregate of the share capital, share premium account and capital redemption reserve of the prior

parentcompany, British Telecommunications plc.

e For further analysis of other reserves, see note 29.

f Includes amounts relating to disposal of investments, for further analysis see note 29.

BT Group plc Annual Report 2024

148 Financial statements

Group statement of changes in equity

		2024	2023
	Notes	£m	£m
Cash flow from operating activities
Profit before taxation		1,186	1,729
Share of post tax loss (profit) of associates and joint ventures		21	59
Net finance expense		1,007	831
Operating profit		2,214	2,619
Other non-cash charges		76	89
(Profit) loss on disposal of businesses		(15)	157
Loss (profit) on disposal of property, plant and equipment and intangible assets		3	2
Depreciation and amortisation, including impairment charges	6	5,398	4,818
(Increase) decrease in inventories		(60)	(47)
Decrease in programme rights		—	7
(Increase) decrease in trade and other receivables		(843)	(285)
Decrease (increase) in contract assets		157	(17)
(Decrease) increase in trade and other payables		(89)	232
Increase (decrease) in contract liabilities		39	41
(Decrease) increase in other liabilities		(850)	(919)
(Decrease) increase in provisions		(18)	(109)
Cash generated from operations		6,012	6,588
Income taxes (paid) refunded		(59)	136
Net cash inflow from operating activities		5,953	6,724
Cash flow from investing activities
Interest received		140	41
Dividends received from joint ventures, associates and investments		20	9
Proceeds on disposal of businesses		81	29
Proceeds on disposal of current financial assets		12,389	11,868
Purchases of current financial assets		(11,216)	(12,705)
Net (purchase) disposal of non-current asset investments		—	(5)
Proceeds on disposal of property, plant and equipment and intangible assets		2	—
Purchases of property, plant and equipment and intangible assets		(4,969)	(5,307)
Prepayment for forward sale of copper		105	—
Decrease (increase) in amounts owed by joint ventures		117	(265)
Settlement of minimum guarantee liability with sports joint venture	17	(211)	(61)
Net cash outflow from investing activities		(3,542)	(6,396)
Cash flow from financing activities
Equity dividends paid		(759)	(751)
Interest paid		(865)	(709)
Repayment of borrowings		(1,676)	(513)
Proceeds from bank loans and bonds		2,242	2,203
Payment of lease liabilities		(748)	(727)
Cash flows from collateral (paid) received		(532)	(17)
Changes in ownership interests in subsidiaries		(13)	—
Proceeds from exercise of employee share options		57	5
Repurchase of ordinary share capital		(133)	(138)
Increase (decrease) in amounts owed to joint ventures	26	(1)	11
Net cash outflow from financing activities		(2,428)	(636)
Net decrease in cash and cash equivalents		(17)	(308)
Opening cash and cash equivalents		381	692
Net decrease in cash and cash equivalents		(17)	(308)
Effect of exchange rate changes		(8)	(3)
Closing cash and cash equivalents i	25	356	381

a FY24 net profit comprises £25m profit on divestments completing in the year less £10m net transaction costs in relation to BT Sport disposal, see note 22.

b Depreciation and amortisation includes goodwill impairment charges of £488m (FY23: £nil), see note 13 for further details.

c Includes pension deficit payments of £823m (FY23: £994m).

d Primarily consists of investment in and redemption of amounts held in liquidity funds.

e Property, plant and equipment, engineering stores and software additions of £4,880m (FY23: £5,056m) (see note 4) and capital accruals movements of £89m (FY23: £251m).

f In FY24 we received an upfront prepayment of £105m from entering into a forward agreement to sell copper granules created from surplus copper cables which are currently

recognised within property, plant and equipment (note 14). As this is expected to be the only cash flow that occurs as part of this transaction the cash receipt has been included as a

separate line within cash flows from investing activities. See note 26 for further details.

g Repayment of borrowings includes the impact of hedging.

h Cash flows relating to cash collateral held in respect of derivative financial assets with certain counterparties, see note 28 for further details.

i Net of bank overdrafts of £58m (FY23: £11m).

BT Group plc Annual Report 2024

149 Financial statements

Group cash flow statement

Year ended 31 March

Preparation of the financial statements

The consolidated financial statements have been prepared in

accordance with UK-adopted international accounting standards

and with the requirements of the Companies Act 2006.

The consolidated financial statements are prepared on a going

concern basis.

This assessment is consistent with the assessment of our viability,

as set out on pages 81 to 82, which has been based on the

Company’s strategy, balance sheet and financing position,

including our £2.1bn undrawn committed borrowing facility which

matures in March 2027, and the potential impact of ‘Our principal

risks and uncertainties’ (pages 63 to 70); and which estimates the

financial impact of a severe but plausible outcome for each risk,

both individually, in combination and through stochastic risk

modelling. This stress testing confirmed that existing projected

cash flows and cash management activities provide us with

adequate headroom over the going concern assessment period.

Having assessed the principal and emerging risks, the directors

considered it appropriate to adopt the going concern basis of

accounting when preparing the group and parent company

financial statements. This assessment covers the period to May

2025, which is consistent with the FRC guidance. When reaching

this conclusion, the directors took into account the group’s and

parent company’s overall financial position (including trading

results and ability to repay term debt as it matures without

recourse to refinancing) and the exposure to principal risks.

In preparing the financial statements, the directors have

considered the impact of climate change, particularly in the

context of the risks identified in the TCFD disclosure on pages 71

to 80 this year. There has been no material impact identified in

respect of the judgements and estimates reported in these

financial statements. The following impacts were considered:

– Low carbon fleet – see note 14

These financial statements consolidate BT Group plc, the parent

company, and its subsidiaries (together the ‘group’, ‘us’, ‘we’ or

‘our’).

The consolidated financial statements are prepared on the

historical cost basis, except for certain financial and equity

instruments that have been measured at fair value. The

consolidated financial statements are presented in sterling, the

functional currency of BT Group plc.

These financial statements cover the financial year from 1 April

2023 to 31 March 2024 (‘FY24’), with comparative figures for the

financial year from 1 April 2022 to 31 March 2023 (‘FY23’).

New and amended accounting standards effective during

the year

The following amended standards were effective during the year,

none of which had a material impact on the financial statements of

the group:

IFRS 17 Insurance Contracts

BT adopted IFRS 17 with retrospective application on 1 April 2023.

The standard establishes principles for the recognition,

measurement, presentation and disclosure of insurance contracts.

The measurement method for insurance contracts required by

IFRS 17 is a probability weighted discounted cash flow model,

including a best estimate and an adjustment for non-financial risk

calculated for groups of similar contracts.

IFRS 17 primarily impacts insurance entities, however, as it applies

to individual contracts it is possible that non-insurers could issue

contracts that are in scope of the standard such as product

breakdown contracts or warranties.

We have assessed the impact of the standard on the group, and

concluded that its impact is not material. Contracts in scope of the

standard entered into by the group are restricted to intragroup

insurance arrangements; the group does not issue external

insurance contracts.

Disclosure of Accounting Policies (Amendments to IAS 1

and IFRS Practice Statement 2)

These amendments require the disclosure of ‘material’ rather than

‘significant’ accounting policies. The amendments have not

resulted in any changes to accounting policies disclosures made in

these financial statements.

International Tax Reform – Pillar Two Model Rules

(Amendments to IAS 12 Income Taxes)

The IASB amended the scope of IAS 12 to introduce a temporary

mandatory exception from deferred tax accounting for top-up tax

arising from the implementation of the OECD Pillar Two model

rules. This was endorsed in the UK in July 2023 and applies to

accounting periods beginning on or after 1 January 2023.

The group applies the exception to recognising and disclosing

information about deferred tax assets and liabilities related to

Pillar Two income taxes, as provided in the amendments to IAS 12

issued in May 2023.

Other

The following changes have not had a significant impact on our

consolidated financial statements:

– Definition of Accounting Estimate (Amendments to IAS 8)

– Deferred Tax related to Assets and Liabilities arising from a

Single Transaction (Amendments to IAS 12)

IFRS Interpretations Committee agenda decisions

The IFRS Interpretations Committee (IFRIC) periodically issues

agenda decisions which explain and clarify how to apply the

principles and requirements of IFRS. Agenda decisions are

authoritative and may require the group to revise accounting

policies or practice to align with the interpretations set out in the

decision.

We regularly review IFRIC updates and assess the impact of

agenda decisions. No agenda decisions finalised during FY24 have

been assessed as having a significant impact on the group.

New and amended accounting standards that have been

issued but are not yet effective

The following new or amended standards and interpretations are

applicable in future periods and are not expected to have a

material impact on the consolidated financial statements:

Supplier Finance Arrangements (Amendments to IAS 7 and

IFRS 7)

The amendments will apply to the group from FY25 onwards and

require new disclosures relating to supplier finance arrangements

that assist in assessing their effects on liabilities, cash flows and

exposure to liquidity risk.

We participate in supply chain financing arrangements which the

amendments will apply to, see note 17. We will include the

required disclosures in the FY25 financial statements.

Other

The following are not expected to have a significant impact on the

consolidated financial statements:

– Classification of Liabilities as Current or Non-current

(Amendments to IAS 1)

– Non-current Liabilities with Covenants (Amendments to IAS 1)

– Lease Liability in a Sale and Leaseback (Amendments to IFRS

16)

– Lack of Exchangeability (Amendments to IAS 21)

Accounting policy and operating segment changes

During FY24 we changed the methodology used to allocate

certain internal costs and our Business CFU began reporting as

a single unit.

BT Group plc Annual Report 2024

150 Financial statements

Notes to the consolidated financial statements

1. Basis of preparation

Allocation of central costs

From 1 April 2023 we have revised the methodology used to

allocate shared Network, Digital and support function costs across

our units to more closely align the recharges received by each unit

to their actual consumption and establish clearer driver-focused

allocation of cost, harmonise principles for pricing and profitability,

and support greater unit cost ownership and management and

decision making.

This represents an accounting policy change and in line with the

requirements of IAS 8 Accounting Policies, Changes in Accounting

Estimates and Errors we have re-presented FY23 comparatives to

enable comparability across periods.

Creation of the Business unit

As disclosed in the FY23 financial statements, the Enterprise and

Global CFUs have been combined into a single CFU, Business,

which began reporting as a single unit from 1 April 2023.

In line with the requirements of IFRS 8 Operating Segments, we

have re-presented FY23 comparatives to reflect the combined

unit.

Re-presentation of prior year comparatives

These changes have resulted in re-presentation of prior year

comparatives. Changes affect segmental disclosures only and have

no impact on the overall reported group financial results.

The following disclosures are impacted by the creation of the

Business unit only. Re-presentation of prior year comparatives is

limited to the combination of the balances previously reported in

respect of the Enterprise and Global units, with no further

adjustments:

– Note 5 Revenue: disaggregation of external revenue

– Note 7 Employees: number of employees

– Note 16 Trade and other receivables: trade receivables not past

due and accrued income by CFU

Note 4 Segment information is also impacted by changes to the

allocation of shared costs. Re-presentation of comparatives has

involved adjustments to reallocate internal costs to report on a

like-for-like basis with FY24 and to remove internal trading

between the Enterprise and Global units. Note 32 presents a

bridge between previously published FY23 financial information

and comparatives presented in these disclosures: Also presented is

a bridge in respect of the CFU normalised free cash flow

comparatives which are re-presented in the Additional information

on page 231 .

Presentation of specific items

Our income statement and segmental analysis separately identify

trading results on an adjusted basis, being before specific items.

The directors believe that presentation of the group’s results in this

way is relevant to an understanding of the group’s financial

performance as specific items are those that in management’s

judgement need to be disclosed by virtue of their size, nature or

incidence.

This presentation is consistent with the way that financial

performance is measured by management and reported to the

Board and the Executive Committee and assists in providing an

additional analysis of our reporting of trading results. Specific

items may not be comparable to similarly titled measures used by

other companies.

In determining whether an event or transaction is specific,

management considers quantitative as well as qualitative factors.

Examples of charges or credits meeting the above definition and

which have been presented as specific items in the current and/or

prior years include significant business restructuring programmes

such as the current group-wide cost transformation and

modernisation programme, acquisitions and disposals of

businesses and investments, impairment of goodwill, charges or

credits relating to retrospective regulatory matters, property

rationalisation programmes, historical property-related provisions,

significant out-of-period contract settlements, net interest on our

pension obligation, and the impact of remeasuring deferred tax

balances. In the event that items meet the criteria, which are

applied consistently from year to year, they are treated as specific

items. Any releases to provisions originally booked as a specific

item are also classified as specific. Conversely, when a reversal

occurs in relation to a prior year item not classified as specific, the

reversal is not classified as specific in the current year.

Movements relating to the sports joint venture (Sports JV) with

Warner Bros. Discovery (WBD), such as fair value gains or losses on

the A and C preference shares or impairment charges on the

equity-accounted investment are classified as specific. Refer to

note 24 for further detail.

Specific items for the current and prior year are disclosed in note 9.

2. Critical & key accounting estimates and

significant judgements

The preparation of financial statements in conformity with IFRS

requires the use of accounting estimates and assumptions. It also

requires management to exercise its judgement in the process of

applying our accounting policies. We continually evaluate our

estimates, assumptions and judgements based on available

information and experience. As the use of estimates is inherent in

financial reporting, actual results could differ from these estimates.

Our critical accounting estimates are those estimates that carry a

significant risk of resulting in a material adjustment to the carrying

amount of assets and liabilities within the next financial year. We

also make other key estimates when preparing the financial

statements, which, while not meeting the definition of a critical

estimate, involve a higher degree of complexity and can

reasonably be expected to be of relevance to a user of the financial

statements. Management has discussed its critical and other key

accounting estimates and associated disclosures with the Audit

and Risk Committee.

Significant judgements are those made by management in

applying our material accounting policies that have a material

impact on the amounts presented in the financial statements. We

may exercise significant judgement in our critical and key

accounting estimates.

Our critical and key accounting estimates and significant

judgements are described in the following notes to the financial

statements. They can be identified by the following symbol .

Note	Critical	Key estimate	Significant
	estimate		judgement
5. Estimate of customer refund		ü
liability
10. Current and deferred		ü	ü
income tax
13. Goodwill impairment	ü		ü
14. Determining the point of sale of BT Tower			ü
15. Reasonable certainty and determination of lease terms			ü
18. Identifying contingent			ü
liabilities
18. Provisions		ü	ü
19. Valuation of pension assets	ü		ü
and liabilities
24. Valuation of investment in A preference shares in Sports		ü
joint venture

BT Group plc Annual Report 2024

151 Financial statements

1. Basis of preparation continued

The material accounting policies applied in the preparation of our

consolidated financial statements are set out below. Other

material accounting policies applicable to a particular area are

disclosed in the most relevant note. They can be identified by the

following symbol .

We have applied all policies consistently to all the years presented,

unless otherwise stated.

Basis of consolidation

The group financial statements consolidate the financial

statements of BT Group plc and its subsidiaries, and include its

share of the results of associates and joint ventures using the

equity method of accounting. The group recognises its direct rights

to (and its share of) jointly held assets, liabilities, revenues and

expenses of joint operations under the appropriate headings in the

consolidated financial statements.

All business combinations are accounted for using the acquisition

method regardless of whether equity instruments or other assets

are acquired.

A subsidiary is an entity that is controlled by another entity, known

as the parent or investor. An investor controls an investee when the

investor is exposed, or has rights, to variable returns from its

involvement with the investee and has the ability to affect those

returns through its power over the investee.

Non-controlling interests in the net assets of consolidated

subsidiaries, which consist of the amounts of those interests at the

date of the original business combination and non-controlling

share of changes in equity since the date of the combination, are

not material to the group’s financial statements.

The results of subsidiaries acquired or disposed of during the year

are consolidated from and up to the date of change of control.

Where necessary, accounting policies of subsidiaries have been

aligned with the policies adopted by the group. All intra-group

transactions including any gains or losses, balances, income or

expenses are eliminated on consolidation.

When the group loses control of a subsidiary, the profit or loss on

disposal is calculated as the difference between (i) the aggregate

of the fair value of the consideration received and the fair value of

any retained interest and (ii) the previous carrying amount of the

assets (including goodwill), and liabilities of the subsidiary and any

non-controlling interests. The profit or loss on disposal is

recognised as a specific item.

Associates are those entities in which the group has significant

influence, but not control or joint control, over the financial and

operating policies.

A joint venture is an arrangement in which the group has joint

control, whereby the group has rights to the net assets of the

arrangement, rather than rights to its assets and obligations for its

liabilities. Joint control is the contractually agreed sharing of

control of an arrangement, which exists only when decisions about

the activities that significantly affect the returns of the

arrangement require the unanimous consent of the parties sharing

control.

Interests in associates and joint ventures are initially recognised at

cost (including transaction costs) except where they relate to a

retained non-controlling interest in a former subsidiary, which is

initially recognised at a deemed cost being the fair value of the

retained interest. Subsequent to initial recognition, the

consolidated financial statements include the group’s share of the

profit or loss and other comprehensive income of equity-

accounted investees, until the date on which significant influence

or joint control ceases.

Inventories

Network maintenance equipment and equipment to be sold to

customers are stated at the lower of cost or net realisable value,

taking into account expected revenue from the sale of packages

comprising a mobile handset and a subscription. Cost corresponds

to purchase or production cost determined by either the first in

first out (FIFO) or average cost method.

Government grants

Government grants are recognised when there is reasonable

assurance that the conditions associated with the grants have been

complied with and the grants will be received.

Grants for the purchase or production of property, plant and

equipment are deducted from the cost of the related assets and

reduce future depreciation expense accordingly. Grants for the

reimbursement of operating expenditure are deducted from the

related category of costs in the income statement. Estimates and

judgements applied in accounting for government grants received

in respect of Building Digital UK (BDUK) and other rural superfast

broadband contracts are described in note 14.

Once a government grant is recognised, any related deferred

income is treated in accordance with IAS 20 ‘Accounting for

Government Grants and Disclosure of Government Assistance’.

Foreign currencies

The consolidated financial statements are presented in sterling,

which is also the company’s functional currency. Each group entity

determines its own functional currency.

Foreign currency transactions are translated into the functional

currency using the exchange rates prevailing at the date of the

transaction. Foreign exchange gains and losses resulting from the

settlement of transactions and the translation of monetary assets

and liabilities denominated in foreign currencies at period end

exchange rates are recognised in the income statement line which

most appropriately reflects the nature of the item or transaction.

On consolidation, assets and liabilities of foreign undertakings are

translated into the group’s presentation currency at year end

exchange rates. The results of foreign undertakings are translated

into sterling at the rates prevailing on the transaction dates.

Foreign exchange differences arising on the retranslation of

foreign undertakings are recognised directly in a separate

component of equity, the translation reserve. There is no material

exposure to companies operating in hyperinflationary economies.

In the event of the disposal of an undertaking with assets and

liabilities denominated in a foreign currency, the cumulative

translation difference associated with the undertaking in the

translation reserve is charged or credited to the gain or loss on

disposal recognised in the income statement.

Research and development

Research expenditure is recognised in the income statement in the

period in which it is incurred. Development expenditure, including

the cost of internally developed software, is recognised in the

income statement in the period in which it is incurred unless it is

probable that economic benefits will flow to the group from the

asset being developed, the cost of the asset can be reliably

measured and technical feasibility can be demonstrated, in which

case it is capitalised as an intangible asset on the balance sheet.

Capitalisation ceases when the asset being developed is ready for

use. Research and development costs include direct and indirect

labour, materials and directly attributable overheads.

Termination benefits

Termination benefits (leaver costs) are payable when employment

is terminated before the normal retirement date, or when an

employee accepts voluntary redundancy in exchange for these

benefits. We recognise termination benefits when they are

demonstrably committed to the affected employees leaving

the group.

BT Group plc Annual Report 2024

152 Financial statements

Notes to the consolidated financial statements continued

3. Material accounting policies that apply to the overall financial statements

Material accounting policies that apply to segment information

Operating and reportable segments

Our operating segments are reported based on financial information provided to the Executive Committee, which is the key

management committee and represents the ‘chief operating decision maker’.

Our organisational structure reflects the different customer groups to which we provide communications products and services via

our customer-facing units (CFUs). The CFUs are our reportable segments and generate substantially all of our revenue.

During the year to 31 March 2024 the group had three CFUs: Consumer, Business and Openreach. Business was formed from the

merger of the Global and Enterprise units during FY23 and has been monitored by the Executive Committee on a consolidated basis

since 1 April 2023.

The CFUs are supported by technology units (TUs) comprising Digital and Networks; and corporate units (CUs) including

procurement and property management. TUs and CUs are not reportable segments as they did not meet the quantitative thresholds

as set out in IFRS 8 ‘Operating Segments’ for any of the years presented.

We aggregate the remaining operations and include them in the ‘Other’ category to reconcile to the consolidated results of the

group. The ‘Other’ category includes unallocated TU costs and our CUs.

Allocation of certain items to segments

Provisions for the settlement of significant legal, commercial and regulatory disputes, which are negotiated at a group level, are

initially recorded in the ‘Other’ segment. On resolution of the dispute, the full impact is recognised in the results of the relevant CFU

and offset in the group results through the utilisation of the provision previously charged to the ‘Other’ segment. Settlements which

are particularly significant or cover more than one financial year may fall within the definition of specific items as detailed in note 9, in

which case they are not reflecting in the results of the reportable segment in line with how they are reported to the Executive

Committee.

The costs incurred by TUs and CUs are recharged to the CFUs to reflect the services provided to them. Depreciation and

amortisation incurred by TUs in relation to the networks and systems they manage and operate on behalf of the CFUs is allocated to

the CFUs based on their respective utilisation. Capital expenditure incurred by TUs for specific projects undertaken on behalf of the

CFUs is allocated based on the value of the directly attributable expenditure incurred. Where projects are not directly attributable to

a particular CFU, capital expenditure is allocated among them based on the proportion of estimated future economic benefits.

Specific items are detailed in note 9 and are not allocated to the reportable segments as this reflects how they are reported to the

Executive Committee. Finance expense and income are not allocated to the reportable segments, as the central treasury function

manages this activity, together with the overall net debt position of the group.

Measuring segment performance

Performance of each reportable segment is measured based on adjusted EBITDA. Adjusted EBITDA is defined as the group profit or

loss before specific items, net finance expense, taxation, depreciation and amortisation and share of post tax profits or losses of

associates and joint ventures. Adjusted EBITDA is considered to be a useful measure of the operating performance of the CFUs

because it approximates the underlying operating cash flow by eliminating depreciation and amortisation and also provides a

meaningful analysis of trading performance by excluding specific items, which are disclosed separately by virtue of their size, nature

or incidence. We also increasingly track adjusted operating profit which reflects the growing depreciation expense arising from our

elevated network investment.

Revenue recognition

Our revenue recognition policy is set out in note 5.

Internal revenue and costs

Most of our internal trading relates to Openreach and arises on rentals, and any associated connection or migration charges, of the

UK access lines and other network products to the other CFUs, including the use of BT Ireland’s network. This occurs both directly,

and also indirectly, through TUs which are included within the ‘Other’ segment. Business internal revenue arises from Consumer for

mobile Ethernet access and TUs for transmission planning services. Intra-group revenue generated from the sale of regulated

products and services is based on market price. Intra-group revenue from the sale of other products and services is agreed between

the relevant CFUs and therefore the profitability of CFUs may be impacted by transfer pricing levels.

Geographic segmentation

The UK is our country of domicile and is where we generate the majority of our revenue from external UK customers. The geographic

analysis of revenue is based on the country in which the customer is invoiced. The geographic analysis of non-current assets, which

excludes derivative financial instruments, investments, preference shares in joint ventures, retirement benefit schemes in surplus and

deferred tax assets, is based on the location of the assets.

BT Group plc Annual Report 2024

153 Financial statements

4. Segment information

Segment revenue and profit

		Consumer	Business	Openreach	Other	Total
Year ended 31 March 2024		£m	£m	£m	£m	£m
Segment revenue		9,833	8,128	6,077	16	24,054
Internal revenue		(47)	(71)	(3,101)	—	(3,219)
Adjusted a	revenue from external customers	9,786	8,057	2,976	16	20,835
Adjusted EBITDA		2,672	1,630	3,827	(29)	8,100
Depreciation and amortisation		(1,738)	(984)	(2,052)	(125)	(4,899)
Adjusted a	operating profit (loss)	934	646	1,775	(154)	3,201
Specific operating profit (loss) – see note 9						(987)
Operating profit						2,214
Net finance expense						(1,007)
Share of post tax (loss) profit of associates and joint ventures						(21)
Profit before tax						1,186

		Consumer	Business	Openreach	Other	Total
Year ended 31 March 2023 (re-presented d )		£m	£m	£m	£m	£m
Segment revenue		9,737	8,258	5,675	27	23,697
Internal revenue		(57)	(81)	(2,890)	—	(3,028)
Adjusted a	revenue from external customers	9,680	8,177	2,785	27	20,669
Adjusted EBITDA		2,469	1,945	3,510	4	7,928
Depreciation and amortisation		(1,603)	(1,047)	(1,965)	(138)	(4,753)
Adjusted a	operating profit (loss)	866	898	1,545	(134)	3,175
Specific operating profit (loss) – see note 9						(556)
Operating profit						2,619
Net finance expense						(831)
Share of post tax (loss) profit of associates and joint ventures						(59)
Profit before tax						1,729

a Before specific items.

b Adjusted EBITDA is defined as profit or loss before specific items, net finance expense, taxation, depreciation and amortisation and share of post tax profits or losses of associates and

joint ventures.

c Net finance expense includes specific item expense of £121m (FY23: £5m). See note 9.

d Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit and a change in the methodology used

to allocate shared central costs. For more information see note 1, and for a bridge to prior period published financial information see note 32.

Internal revenue and costs

			Internal cost recorded by
	Consumer	Business	Openreach	Other	Total
Year ended 31 March 2024	£m	£m	£m	£m	£m
Internal revenue recorded by Consumer	—	46	—	1	47
Business	23	—	—	48	71
Openreach	2,044	1,043	—	14	3,101
Total	2,067	1,089	—	63	3,219

			Internal cost recorded by
	Consumer	Business	Openreach	Other	Total
Year ended 31 March 2023 (re-presented a )	£m	£m	£m	£m	£m
Internal revenue recorded by Consumer	—	56	—	1	57
Business	26	—	—	55	81
Openreach	1,805	1,072	—	13	2,890
Total	1,831	1,128	—	69	3,028

a Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit. For more information see note 1, and

for a bridge to prior period published financial information see note 32.

BT Group plc Annual Report 2024

154 Financial statements

Notes to the consolidated financial statements continued

4. Segment information continued

Capital expenditure

	Consumer	Business	Openreach	Other	Total
Year ended 31 March 2024	£m	£m	£m	£m	£m
Intangible assets a	439	361	135	3	938
Property, plant and equipment	736	414	2,710	82	3,942
Capital expenditure	1,175	775	2,845	85	4,880

	Consumer	Business	Openreach	Other	Total
Year ended 31 March 2023 (re-presented c )	£m	£m	£m	£m	£m
Intangible assets a	552	361	101	4	1,018
Property, plant and equipment	669	525	2,746	98	4,038
Capital expenditure	1,221	886	2,847	102	5,056

a Additions to intangible assets as presented in note 13.

b Additions to property, plant and equipment as presented in note 14, inclusive of movement on engineering stores.

c Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing units. For more information see note 1, and

for a bridge to prior period published financial information see note 32.

Geographic segmentation

Revenue from external customers

		2024	2023
Year ended 31 March		£m	£m
UK		18,450	18,154
Europe, Middle East and Africa, excluding the UK		1,303	1,372
Americas		617	684
Asia Pacific		465	459
Adjusted a	revenue	20,835	20,669

a Before specific items.

Non-current assets

	2024	2023
At 31 March	£m	£m
UK	39,370	39,387
Europe, Middle East and Africa, excluding the UK	634	740
Americas	251	283
Asia Pacific	147	156
Non-current assets a	40,402	40,566

a Comprising the following balances presented in the group balance sheet: intangible assets, property, plant and equipment, right-of-use assets, joint ventures and associates, trade

and other receivables and contract assets.

BT Group plc Annual Report 2024

155 Financial statements

4. Segment information continued

Material accounting policies that apply to revenue

Revenue from contracts with customers in scope of IFRS 15

Most revenue recognised by the group is in scope of IFRS 15, excluding Openreach where most revenue is in scope of IFRS 16. The

revenue recognition policy for both is set out below.

On inception of the contract we identify a “performance obligation” for each of the distinct goods or services we have promised to

provide to the customer. The consideration specified in the contract with the customer is allocated to each performance obligation

identified based on their relative standalone selling prices, and is recognised as revenue as they are satisfied.

The table below summarises the performance obligations we have identified for our major service lines and provides information on

the timing of when they are satisfied and the related revenue recognition policy. Also detailed in this note is revenue expected to be

recognised in future periods for contracts in place at 31 March 2024 that contain unsatisfied performance obligations.

Service line	Performance obligations	Revenue recognition policy
Information and	Provision of networked IT services, managed network	Revenue for services is recognised over time using a
communications	services, and arrangements to design and build	measure of progress that appropriately reflects the
technology (ICT)	software solutions. Performance obligations are	pattern by which the performance obligation is
and managed	identified for each distinct service or deliverable for	satisfied. For time and materials contracts, revenue is
networks	which the customer has contracted, and are	recognised as the service is received by the customer.
	considered to be satisfied over the time period that we	Where performance obligations exist for the provision
	deliver these services or deliverables. Commitments to	of hardware, revenue is recognised at the point in time
	provide hardware to customers that are distinct from	that the customer obtains control of the promised
	the other promises are considered to be satisfied at the	asset. For long-term fixed price contracts revenue
	point in time that control passes to the customer.	recognition will typically be based on the satisfaction
		of performance obligations in respect of the
		achievement of contract milestones and customer
		acceptance, which is the best measure of progress
		towards the completion of the performance obligation.
Fixed access	Provision of broadband, TV and fixed telephony	Fixed subscription charges are recognised as revenue
subscriptions	services including national and international calls,	on a straight-line basis over the period that the
	connections, line rental and calling features.	services are provided. Upfront charges for non-distinct
	Performance obligations exist for each ongoing service	connection and installation services are deferred as
	provided to the customer and are satisfied over the	contract liabilities and are recognised as revenue over
	period that the services are provided. Installation	the same period. Variable charges such as call charges
	services are recognised as distinct performance	are recognised when the related services are delivered.
	obligations if their relationship with the other services	Where installation activities are distinct performance
	in the contract is purely functional. These are satisfied	obligations, revenue is recognised at the point in time
	when the customer benefits from the service.	that the installation is completed.
	Connection services are not distinct performance
	obligations and are therefore combined with the
	associated service performance obligation.
Mobile	Provision of mobile postpaid and prepaid services,	Subscription fees, consisting primarily of monthly
subscriptions	including voice minutes, SMS and data services.	charges for access to internet or voice and data
	Performance obligations exist for each ongoing service	services, are recognised as the service is provided.
	provided to the customer and are satisfied over the	One-off services such as calls outside of plan and
	period that the services are provided.	excess data usage are recognised when the service is
		used.
Equipment and	Provision of equipment and other services, including	Revenue from equipment sales is recognised at the
other services	mobile phone handsets and hardware such as set-top	point in time that control passes to the customer.
	boxes and broadband routers provided as part of	Where payment is not received in full at the time of the
	customer contracts. Performance obligations are	sale, such as with equipment provided as part of
	satisfied at the point in time that control passes to the	mobile and fixed access subscriptions, contract assets
	customer. For other services, performance obligations	are recognised for the amount due from the customer
	are identified based on the distinct goods and services	that will be recovered over the contract period.
	we have committed to provide.	Revenue to be recognised is calculated by reference to
		the relative standalone selling price of the equipment.
		For other services, revenue is recognised when the
		related performance obligations are satisfied, which
		could be over time, in line with contract milestones, or
		at a point in time depending on the nature of the
		service.

BT Group plc Annual Report 2024

156 Financial statements

Notes to the consolidated financial statements continued

5. Revenue

We recognise revenue based on the relative standalone selling price of each performance obligation. Determining the standalone

selling price often requires judgement and may be derived from regulated prices, list prices, a cost-plus derived price or the price of

similar products when sold on a standalone basis by BT or a competitor. In some cases it may be appropriate to use the contract price

when this represents a bespoke price that would be the same for a similar customer in a similar circumstance.

The fixed access and mobile subscription arrangements sold by our Consumer business are typically payable in advance, with any

variable or one-off charges billed in arrears. Contracts are largely inflation-linked with price increases recognised when effective.

Payment is received immediately for direct sales of equipment to customers. Where equipment is provided to customers under

mobile and fixed access subscription arrangements, payment for the equipment is received over the course of the contract term. For

sales by our enterprise businesses, invoices are issued in line with contractual terms. Payments received in advance are recognised as

contract liabilities; amounts billed in arrears are recognised as contract assets.

We adopt variable consideration to allocate the transaction price to take account of the likelihood of the customer upgrading to a

new handset during the contract term. Consideration is constrained to a period shorter than the contract term and is allocated to the

handset and airtime based on relative standalone selling price. Certain Business long term contracts offer rebates to our customers.

Where this is the case we make an estimate of variable consideration at the outset of the contract based on assumed volumes. These

rebates are normally settled monthly against service revenues.

We are applying the practical expedient to recognise revenue “as-invoiced” for certain fixed access and mobile subscription services

revenues. Where we have a right to invoice at an amount that directly corresponds with performance to date, we recognise revenue

at that amount. We have also adopted the practical expedient not to calculate the aggregate amount of the transaction price

allocated to the performance obligations that are unsatisfied for these contracts.

We do not have any material obligations in respect of returns, refunds or warranties.

Where we act as an agent in a transaction, such as insurance services offered, we recognise commission net of directly attributable

costs.

We exercise judgement in assessing whether the initial set-up, transition and transformation phases of long-term contracts are

distinct from the other services to be delivered under the contract and therefore represent distinct performance obligations. This

determines whether revenue is recognised in the early stages of the contract, or deferred until delivery of the other services

promised in the contract begins.

We recognise immediately the entire estimated loss for a contract when we have evidence that the contract is unprofitable. If these

estimates indicate that any contract will be less profitable than previously forecast, contract assets may have to be written down to

the extent they are no longer considered to be fully recoverable. We perform ongoing profitability reviews of our contracts in order

to determine whether the latest estimates are appropriate. Key factors reviewed include:

– Transaction volumes or other inputs affecting future revenues which can vary depending on customer requirements, plans, market

position and other factors such as general economic conditions.

– Our ability to achieve key contract milestones connected with the transition, development, transformation and deployment

phases for customer contracts.

– The status of commercial relations with customers and the implications for future revenue and cost projections.

– Our estimates of future staff and third party costs and the degree to which cost savings and efficiencies are deliverable.

Revenue from lease arrangements in scope of IFRS 16

Some consumer broadband and TV products and arrangements to provide external communications providers with exclusive use of

Openreach’s fixed-network telecommunications infrastructure meet the definition of operating leases under IFRS 16.

At inception of a contract, we determine whether the contract is, or contains, a lease following the accounting policy set out in note

15. Arrangements meeting the definition of a lease in which we act as lessor are classified as operating or finance leases at lease

inception based on an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to

ownership of the underlying asset. If this is the case then the lease is a finance lease; if not, it is an operating lease. For sub-leases, we

make this assessment by reference to the characteristics of the right-of-use asset associated with the head lease rather than the

underlying leased asset.

Income from arrangements classified as operating leases is presented as revenue where it relates to our core operating activities, for

example leases of fixed-line telecommunications infrastructure to external communications providers and leases of devices to

consumer customers as part of fixed access subscription products. Operating lease income from other arrangements is presented

within other operating income (note 6).

We recognise operating lease payments as income on a straight-line basis over the lease term. Any upfront payments received, such

as connection fees, are deferred over the lease term. Determining the lease term is subject to the significant judgements set out in

note 15.

Where the contract contains both lease and non-lease components, the transaction price is allocated between the components on

the basis of relative standalone selling price.

Where an arrangement is assessed as a finance lease we derecognise the underlying asset and recognise a receivable equivalent to

the net investment in the lease. Finance lease receivables are presented in note 16. The receivable is measured based on future

payments to be received discounted using the interest rate implicit in the lease, adjusted for any direct costs. Any difference between

the derecognised asset and the finance lease receivable is recognised in the income statement. Where the nature of services

delivered relates to our core operating activities it is presented as revenue. Where it relates to non-core activities it is presented

within other operating income (note 6).

BT Group plc Annual Report 2024

157 Financial statements

5. Revenue continued

Disaggregation of external revenue

The following table disaggregates external revenue by our major service lines and by reportable segment.

	Consumer	Business	Openreach	Other	Total
Year ended 31 March 2024	£m	£m	£m	£m	£m
ICT and managed networks	—	3,592	—	—	3,592
Fixed access subscriptions	4,333	2,149	2,900	—	9,382
Mobile subscriptions	3,557	1,187	—	—	4,744
Equipment and other services	1,896	1,129	76	16	3,117
Revenue before specific items	9,786	8,057	2,976	16	20,835
Specific items a (note 9)					(38)
Revenue					20,797

Year ended 31 March 2023	Consumer	Business	Openreach	Other	Total
(re-presented b )	£m	£m	£m	£m	£m
ICT and managed networks	—	3,352	—	—	3,352
Fixed access subscriptions	4,059	1,893	2,716	—	8,668
Mobile subscriptions	3,351	1,160	—	—	4,511
Equipment and other services	2,270	1,772	69	27	4,138
Revenue before specific items	9,680	8,177	2,785	27	20,669
Specific items a (note 9)					12
Revenue					20,681

a Relates to regulatory matters classified as specific. See note 9.

b Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit, formed through the merger of our

Enterprise and Global units, see note 1.

Revenue expected to be recognised in future periods for performance obligations that are not complete (or are partially complete) as at

31 March 2024 is £12,133m (FY23: £12,792m). Of this, £6,052m (FY23: £6,592m) relates to ICT and managed services contracts and

equipment and other services which will substantially be recognised as revenue within three years. Fixed access and mobile subscription

services typically have shorter contract periods and so £6,081m (FY23: £6,200m) will substantially be recognised as revenue within two

years.

Revenue recognised this year relating to performance obligations that were satisfied, or partially satisfied, in previous years was not

material. Revenue related to customers’ unexercised rights (for example, unused amounts on prepaid SIM cards) was not material.

Key accounting estimates made in accounting for revenue

Estimate of customer refunds

Revenue has been adjusted to reflect a risk of billing inaccuracy where there is a high level of manual processing through certain

billing systems. This is associated with a small number of products within our Business unit which contain bespoke pricing. £41m has

been recognised as an IFRS 9 financial liability and deducted from revenue, and has been derived from an estimate of the possible

range of the adjustment from £24m to £64m based on the results of a sample of billing items. This is presented within Note 17 and

represents our best estimate required to cover ongoing billing adjustments to products relating to both current and prior periods. If

the final quantum of adjustments is less than expected, the adjustment will be released back to the income statement.

Lease income

Presented within revenue is £3,031m (FY23: £2,909m) income from arrangements classified as operating leases under IFRS 16 and which

represent core business activities for the group. Income relates predominantly to Openreach’s leases of fixed-line telecommunications

infrastructure to external communications providers, classified as fixed access subscription revenue in the table above, and leases of

devices to Consumer customers as part of fixed access subscription offerings, classified as equipment and other services.

During the year we also recognised:

– £26m (FY23: £29m) operating lease income from non-core business activities which is presented in other operating income (note 6).

Note 15 presents an analysis of payments to be received across the remaining term of operating lease arrangements.

– £40m (FY23: £58m) revenue in relation to upfront gains from arrangements meeting the definition of a finance lease. These

arrangements meet the criteria for revenue recognition as they concern leases and sub-leases of telecommunications infrastructure

that represent core business activities of the group.

£38m (FY23: £69m) of this income relates to the sub-leasing of right-of-use assets. These are primarily operating sub-leases of unutilised

properties, and finance sub-leases of telecommunications infrastructure.

BT Group plc Annual Report 2024

158 Financial statements

Notes to the consolidated financial statements continued

5. Revenue continued

Contract assets and liabilities

Material accounting policies that apply to contract assets and liabilities

We recognise contract assets for goods and services for which control has transferred to the customer before we have the right to

bill. These assets mainly relate to mobile handsets provided upfront but paid for over the course of a contract. Contract assets are

reclassified as receivables when the right to payment becomes unconditional and we have billed the customer.

Contract liabilities are recognised when we have received advance payment for goods and services that we have not transferred to

the customer. These primarily relate to fees received for connection and installation services that are not distinct performance

obligations.

Where the initial set-up, transition or transformation phase of a long-term contract is considered to be a distinct performance

obligation we recognise a contract asset for any work performed but not billed. Conversely a contract liability is recognised where

these activities are not distinct performance obligations and we receive upfront consideration. In this case eligible costs associated

with delivering these services are capitalised as fulfilment costs, see note 16.

We provide for expected lifetime losses on contract assets following the policy set out in note 16.

Contract assets and liabilities are as follows:

	2024	2023
At 31 March	£m	£m
Contract assets
Current	1,410	1,565
Non-current	330	369
	1,740	1,934
Contract liabilities
Current	906	859
Non-current	175	193
	1,081	1,052

£876m of the contract liability at 31 March 2023 was recognised as revenue during the year (FY23: £903m). Impairment losses of £35m

were recognised on contract assets during the year (FY23: £46m).

The expected credit loss provisions recognised against contract assets vary across the group due to the nature of our customers; the

expected loss rate at 31 March 2024 was 3% (FY23: 3%).

BT Group plc Annual Report 2024

159 Financial statements

5. Revenue continued

		2024	2023
Year ended 31 March	Notes	£m	£m
Operating costs by nature
Staff costs:
Wages and salaries		3,843	3,858
Social security costs		425	424
Other pension costs	19	582	590
Share-based payment expense	21	71	80
Total staff costs		4,921	4,952
Own work capitalised		(1,432)	(1,364)
Net staff costs		3,489	3,588
Net indirect labour costs b		456	381
Net labour costs		3,945	3,969
Product costs		3,527	3,368
Sales commissions		636	589
Payments to telecommunications operators		1,227	1,354
Property and energy costs		1,338	1,242
Network operating and IT costs		930	913
TV programme rights charges		—	354
Provision and installation		515	591
Marketing and sales		367	363
Net impairment losses on trade receivables and contract assets		165	138
Other operating costs		323	103
Other operating income		(238)	(243)
Depreciation and amortisation, including impairment charges		4,899	4,753
Total operating costs before specific items		17,634	17,494
Specific items	9	949	568
Of which goodwill impairment		488	—
Total operating costs		18,583	18,062
Operating costs before specific items include the following:
Leaver costs		9	11
Research and development expenditure		726	683
Foreign currency (gains)/losses		(2)	(9)
Inventories recognised as an expense		2,170	2,311

a Leaver costs are included within wages and salaries, except for leaver costs of £242m (FY23: £129m) associated with restructuring costs, which have been recorded as specific items.

b Net indirect labour costs relate to subcontracted labour costs net of capitalised indirect labour costs of £772m (FY23: £824m).

c TV programme rights charges relate to programme rights assets which were transferred to the sports joint venture in August 2022, see note 22.

d Consists of net impairment losses on trade receivables and contract assets in Consumer of £98m (FY23: £94m), in Business of £45m (FY23: £32m), in Openreach of £20m (FY23:

£5m) and in Other of £2m (FY23: £1m).

e Research and development expenditure includes amortisation of £679m (FY23: £632m) in respect of capitalised development costs and operating expenses of £47m (FY23: £51m).

In addition, the group capitalised software development costs of £429m (FY23: £503m) .

BT Group plc Annual Report 2024

160 Financial statements

Notes to the consolidated financial statements continued

6. Operating costs

Depreciation and amortisation, which includes impairment charges, is analysed as follows:

		2024	2023
Year ended 31 March	Notes	£m	£m
Depreciation and amortisation before impairment charges
Intangible assets	13	1,248	1,165
Property, plant and equipment	14	2,892	2,878
Right-of-use assets	15	652	689
Impairment charges
Intangible assets	13	—	—
Property, plant and equipment	14	108	11
Right-of-use assets	15	(1)	10
Total depreciation and amortisation before specific items		4,899	4,753
Impairment charges classified as specific items	9
Intangible assets		488	—
Property, plant and equipment		—	—
Right-of-use assets		11	65
Total depreciation and amortisation		5,398	4,818

a Impairments of network infrastructure and engineering stores in FY24 and other assets in FY23, see note 14.

b FY24 impairment charge reflects a net reversal of impairment on properties reoccupied subsequent to initial impairment.

c FY24 impairment charge represents impairment of goodwill allocated to our Business cash generating unit, further details in note 13.

Who are our key management personnel and how are they compensated?

Key management personnel comprise Executive and Non-Executive Directors and members of the Executive Committee.

Compensation of key management personnel is shown in the table below:

	2024	2023
Year ended 31 March	£m	£m
Short-term employee benefits	16.6	23.0
Post employment benefits	0.7	0.7
Share-based payments	8.1	6.7
	25.4	30.4

a Post employment benefits include cash pension allowances paid to the Chief Executive and Chief Financial Officer. The group does not contribute to defined contribution or defined

benefit pension schemes on behalf of key management personnel.

Key management personnel are compensated solely in the form of cash and share-based payments. During FY24, one member of key

management personnel (FY23: none) exercised saveshare options, see note 21.

7. Employees

		2024					2023
	a		b	b		Average a	Average b FTE	Year end b FTE
	Average	Average	FTE	Year end	FTE
Number of employees in the group	’000		’000		’000	’000	’000	’000
UK	77.3		74.9		71.4	82.2	79.7	77.6
Non-UK	20.1		20.0		20.3	19.1	19.1	19.5
Total employees	97.4		94.9		91.7	101.3	98.8	97.1
Consumer	18.1		16.3		15.8	18.3	16.5	16.4
Business	23.6		23.3		22.6	25.0	24.6	24.0
Openreach	35.1		34.9		32.8	37.9	37.6	36.6
Other	20.6		20.4		20.5	20.1	20.1	20.1
Total employees	97.4		94.9		91.7	101.3	98.8	97.1

a Average reflecting monthly average headcount.

b Average reflecting the full-time equivalent of full- and part-time employees, excluding subcontract labour. There were 28.4k FTE agency & subcontract labour at the FY24 year-end

(FY23: 33.0k).

c Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit, formed through the merger of our

Enterprise and Global units, see note 1.

BT Group plc Annual Report 2024

161 Financial statements

6. Operating costs continued

The following fees were paid or are payable to the company’s auditors, KPMG LLP and other firms in the KPMG network.

	2024	2023
Year ended 31 March	£000	£000
Fees payable to the company’s auditors and its associates for:
Audit services a
The audit of the parent company and the consolidated financial statements	14,473	13,558
The audit of the company’s subsidiaries	6,294	6,274
b	20,767	19,832
Audit related assurance services	2,487	2,553
Other non-audit services	33	55
Total services	23,287	22,440

a Services in relation to the audit of the parent company and the consolidated financial statements. This also includes fees payable for the statutory audits of the financial statements of

subsidiary companies.

b Includes services that are required by law or regulation to be carried out by an appointed auditor and services that support us to fulfil obligations required by law or regulation. This

includes fees for the review of interim results, the accrued fee for the audit of the group’s regulatory financial statements and providing comfort letters for bond issuances.

Fees payable to auditors other than KPMG for audits of certain overseas subsidiaries were £164,000 (FY23: £171,000).

The BT Pension Scheme is an associated pension fund as defined in the Companies (Disclosure of Auditor Remuneration and Liability

Limitation Agreements) (Amendment) Regulations 2011. In FY24 KPMG LLP received total fees from the BT Pension Scheme of £1.9m

(FY23: £1.6m) in respect of the following services:

	2024	2023
Year ended 31 March	£000	£000
Audit of financial statements of associates	1,767	1,622
Audit-related assurance services	26	14
Other non-audit services	74	—
Total services	1,867	1,636

9. Specific items

Material accounting policies that apply to specific items

Our income statement and segmental analysis separately identify trading results on an adjusted basis, being before specific items. The

directors believe that presentation of the group’s results in this way is relevant to an understanding of the group’s financial performance as

specific items are those that in management’s judgement need to be disclosed by virtue of their size, nature or incidence.

This presentation is consistent with the way that financial performance is measured by management and reported to the Board and

the Executive Committee and assists in providing an additional analysis of our reporting trading results. Specific items may not be

comparable to similarly titled measures used by other companies.

In determining whether an event or transaction is specific, management considers quantitative as well as qualitative factors.

Examples of charges or credits meeting the above definition and which have been presented as specific items in the current and/or

prior years include significant business restructuring programmes such as the current group-wide cost transformation and

modernisation programme, acquisitions and disposals of businesses and investments, impairment of goodwill, charges or credits

relating to retrospective regulatory matters, property rationalisation programmes, historical property-related provisions, significant

out of period contract settlements, net interest on our pension obligation, and the impact of remeasuring deferred tax balances. In

the event that items meet the criteria, which are applied consistently from year to year, they are treated as specific items. Any

releases to provisions originally booked as a specific item are also classified as specific. Conversely, when a reversal occurs in relation

to a prior year item not classified as specific, the reversal is not classified as specific in the current year.

Movements relating to the sports joint venture (Sports JV) with Warner Bros. Discovery (WBD), such as fair value gains or losses on

the A and C preference shares or impairment charges on the equity-accounted investment are classified as specific. Refer to note 24

for further detail.

BT Group plc Annual Report 2024

162 Financial statements

Notes to the consolidated financial statements continued

8. Audit, audit related and other non-audit services

	2024	2023
Year ended 31 March	£m	£m
Revenue
Retrospective regulatory matters	38	(12)
Specific revenue	38	(12)
Operating costs
Restructuring charges	388	300
BT Sport disposal	—	155
Sports JV – subsequent movements	32	34
Other divestment-related items	(22)	2
Retrospective regulatory matters	18	12
Historical property-related provisions	34	—
Specific operating costs before depreciation and amortisation	450	503
Impairment charges due to property rationalisation	11	65
Impairment of goodwill	488	—
Specific operating costs	949	568
Specific operating loss	987	556
Net finance expense
Finance expense relating to the BT Sport disposal	—	(13)
Interest expense on retirement benefit obligation	121	18
Specific net finance expense	121	5
Net specific items charge before tax	1,108	561
Taxation
Tax credit on specific items above	(145)	(308)
	(145)	(308)
Net specific items charge after tax	963	253

Retrospective regulatory matters

We recognised net £56m impact in relation to historical regulatory

matters, with £38m charges recognised in revenue and £18m

within operating costs (FY23: net impact of £nil). These items

represent movements in provisions relating to various matters.

Restructuring charges

We have incurred charges of £388m (FY23: £300m) relating to

projects associated with our group-wide cost transformation and

modernisation programme. Costs primarily relate to leaver costs,

consultancy costs, and staff costs associated with colleagues

working exclusively on programme activity. The net cash cost of

restructuring activity during the year was £348m (FY23: £326m).

The programme was first announced in May 2020 and runs until

the end of FY25. In response to cost inflation, during FY23 we

revised the gross annualised savings target to £3.0bn (previously

£2.5bn), with a cost to achieve of £1.6bn (previously £1.3bn). We

have now achieved our £3bn target 12 months early at a cost to

achieve of £1.5bn, £0.1bn lower than target (FY23: achieved gross

annualised savings of £2.1bn and costs of £1.1bn).The cumulative

cash costs incurred amount to £1.5bn (FY23: £1.1bn).

BT Sport disposal

In the prior year, we completed the disposal of BT Sport operations

through forming the Sports JV with WBD. We recognised a profit

on disposal of £28m in specific items, made up of £155m charges

recognised within operating costs net of £183m tax credits. We

also recognised a £13m credit within finance costs as specific,

relating to a foreign exchange hedging arrangement with the

Sports JV.

Sports JV subsequent movements

Subsequent to the BT Sport disposal, we have recorded a net fair

value loss of £22m (FY23: £34m) on the A and C preference shares

held in the Sports JV (see note 24), and £10m additional net costs

relating to the transaction.

Other divestment-related items

We recognised a £22m credit (FY23: £2m charge) comprising a

net £25m gain on disposal from the completed divestments of

Pelipod Limited, BT Enia S.p.A and certain city fibre networks and

associated infrastructure assets in Germany; offset by £3m charges

relating to ongoing divestment activity.

Historical property-related provisions

During FY24 we recognised a provision of £34m as a specific item

(FY23: nil) in relation to the cost of remediating and rectifying

asbestos related property issues where we have a present

obligation to do this.

Impairment charges due to property rationalisation

During FY24, we recognised a £11m impairment charge as specific

(FY23: £65m), in relation to an ongoing property rationalisation

programme.

Impairment of goodwill

We have recognised an impairment charge of £488m (FY23: nil) in

respect of goodwill allocated to our Business cash generating unit.

See note 13 for more details.

Interest expense on retirement benefit obligation

During the year we incurred £121m (FY23: £18m) of interest costs

in relation to our defined benefit pension obligations.

Tax on specific items

A tax credit of £145m was recognised in relation to specific items

(FY23: £308m, of which £183m relates to the BT Sport disposal).

BT Group plc Annual Report 2024

163 Financial statements

9. Specific items continued

Material accounting policies that apply to taxation

Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the

countries where the group’s subsidiaries, associates and joint ventures operate and generate taxable income. We evaluate positions

taken in tax returns where tax regulation is subject to interpretation, and establish provisions if appropriate based on the amounts

likely to be paid to tax authorities.

Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying amount of our assets

and liabilities and their tax base. Deferred tax is determined using tax rates that are expected to apply in the periods in which the

asset is realised or liability settled, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet

date.

Deferred and current income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets

and liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority

where there is an intention to settle the balances on a net basis. Any remaining deferred tax asset is recognised only when, on the

basis of all available evidence, it is probable that there will be suitable taxable profits against which the deductible temporary

difference can be utilised. Deferred tax balances for which there is a right of offset within the same jurisdiction are presented net on

the face of the group balance sheet as permitted by IAS 12, with the exception of deferred tax related to our pension schemes which

is disclosed within deferred tax assets.

Key accounting estimates and significant judgements made in accounting for taxation

We seek to pay tax in accordance with the laws of the countries where we do business. However, in some areas these laws are

unclear, and it can take many years to agree an outcome with a tax authority or through litigation. We estimate our tax on country-

by-country and issue-by-issue bases. Our key uncertainties are whether our intra-group trading model will be accepted by a

particular tax authority and whether intra-group payments are subject to withholding taxes. We provide for the predicted outcome

where an outflow is probable, but the agreed amount can differ materially from our estimates. Approximately 65% by value of the

provisions are under active tax authority examination and are therefore likely to be re-estimated or resolved in the coming 12

months. £112m (FY23: £104m) is included in current tax liabilities or offset against current tax assets where netting is appropriate.

We are subject to regular tax authority review, under a downside case an additional amount of £123m could be required to be paid.

This amount is not provided as we don’t consider this outcome to be probable.

Deciding whether to recognise deferred tax assets is judgemental. We only recognise them when we consider it is probable that they

can be recovered. In making this judgement we consider evidence such as historical financial performance, future financial plans and

trends and whether our intra-group pricing model has been agreed by the relevant tax authority.

The value of the group’s income tax assets and liabilities is disclosed on the group balance sheet. The value of the group’s deferred

tax assets and liabilities is disclosed below.

Analysis of our taxation expense for the year

	2024	2023
Year ended 31 March	£m	£m
United Kingdom
Corporation tax at 25% (FY23: 19%)	(10)	—
Adjustments in respect of earlier years	—	63
Non-UK taxation
Current	(77)	(67)
Adjustments in respect of earlier years	(10)	9
Total current taxation (expense)	(97)	5
Deferred taxation
Origination and reversal of temporary differences	(280)	102
Adjustments in respect of earlier years	46	56
Remeasurement of temporary differences	—	13
Total deferred taxation credit (expense)	(234)	171
Total taxation (expense)	(331)	176

BT Group plc Annual Report 2024

164 Financial statements

Notes to the consolidated financial statements continued

10. Taxation

Factors affecting our taxation expense for the year

The taxation expense on the profit for the year differs from the amount computed by applying the UK corporation tax rate to the profit

before taxation as a result of the following factors:

	2024	2023
Year ended 31 March	£m	£m
Profit before taxation	1,186	1,729
Expected taxation expense at UK rate of 25% (FY23: 19%)	(297)	(328)
Effects of:
(Higher)/lower taxes on non-UK profits	25	—
Net permanent differences between tax and accounting	(114)	352
Adjustments in respect of earlier years b	40	126
Prior year non-UK losses used against current year profits	10	5
Non-UK losses not recognised	5	9
Re-measurement of deferred tax balances	—	12
Total taxation credit (expense)	(331)	176
Exclude specific items (note 9)	(145)	(308)
Total taxation expense before specific items	(476)	(132)

a Includes income that is not taxable or UK income taxable at a different rate including the UK patent box incentive of £60m (FY23: £35m), and expenses for which no tax relief is

received including a loss on goodwill impairment of £122m. In FY23 this included the benefit of the UK super-deduction of £250m and the non-taxable profit on the disposal and

revaluation of BT Sport of £104m.

b Reflects the differences between initial accounting estimates and tax returns submitted to tax authorities, including the release and establishment of provisions for uncertain tax

positions.

c Reflects losses made in countries where it has not been considered appropriate to recognise a deferred tax asset, as future taxable profits are not probable.

Tax components of other comprehensive income

	2024	2023
	Tax credit	Tax credit
	(expense)	(expense)
Year ended 31 March	£m	£m
Taxation on items that will not be reclassified to the income statement
Pension remeasurements	600	732
Tax on items that have been or may be reclassified subsequently to the income statement
Exchange differences on translation of foreign operations	9	—
Fair value movements on cash flow hedges
– net fair value gains or (losses)	69	(90)
– recognised in income and expense	—	—
Total tax recognised in other comprehensive income	678	642
Current tax credit	—	8
Deferred tax credit (expense)	678	634
Total tax recognised in other comprehensive income	678	642

a Includes £nil (FY23: £nil) relating to cash contributions made to reduce retirement benefit obligations.

Tax (expense) credit recognised directly in equity

	2024	2023
Year ended 31 March	£m	£m
Tax (expense) credit relating to share-based payments	(12)	(9)

BT Group plc Annual Report 2024

165 Financial statements

10. Taxation continued

Deferred taxation

	Fixed asset	Retirement	Share-
	temporary	benefit	based	Tax		Jurisdictional
		a
	differences	obligations	payments	losses	Other	offset	Total
	£m	£m	£m	£m	£m	£m	£m
At 1 April 2022	2,913	(195)	(36)	(857)	(154)	—	1,671
Expense (credit) recognised in the income statement	886	(18)	(13)	(1,022)	(4)	—	(171)
Expense (credit) recognised in other comprehensive income	—	(413)	—	(311)	90	—	(634)
Expense (credit) recognised in equity	—	—	9	—	—	—	9
Exchange differences	—	—	—	(4)	(3)	—	(7)
Acquisition of subsidiary	—	—	—	—	2	—	2
Transfer from current tax	—	—	—	—	41	—	41
At 31 March 2023	3,799	(626)	(40)	(2,194)	(28)	—	911
Non-current
Deferred tax asset	—	(626)	(40)	(2,194)	(28)	2,179	(709)
Deferred tax liability	3,799	—	—	—	—	(2,179)	1,620
At 31 March 2023	3,799	(626)	(40)	(2,194)	(28)	—	911
Expense (credit) recognised in the income statement	782	(17)	2	(454)	(79)	—	234
Expense (credit) recognised in other comprehensive income	—	(325)	—	(266)	(87)	—	(678)
Expense (credit) recognised in equity	—	—	12	—	—	—	12
Exchange differences	—	—	—	3	3	—	6
At 31 March 2024	4,581	(968)	(26)	(2,911)	(191)	—	485
Non-current
Deferred tax asset	—	(968)	(26)	(2,911)	(191)	3,048	(1,048)
Deferred tax liability	4,581	—	—	—	—	(3,048)	1,533
At 31 March 2024	4,581	(968)	(26)	(2,911)	(191)	—	485

a Includes a deferred tax asset of £nil (FY23: £8m) arising on contributions payable to defined contribution pension plans.

The majority of the deferred tax assets and liabilities noted above are anticipated to be realised after more than 12 months.

What factors affect our future tax charges?

We expect a large proportion of our capital spend on fibre rollout to be eligible for full expensing under the UK capital allowances regime,

which provides 100% tax relief in the year of spend on qualifying assets. These deductions drive a projected UK tax loss and no UK tax

payments for FY24. The enhanced and accelerated tax deductions arising under the Government’s super-deduction regime for qualifying

capital spend during FY22 and FY23, together with full expensing in FY24 and pension deficit contribution deductions, result in c. £11.3bn

of tax losses expected to be carried forward from FY24, to be utilised against future UK taxable profits. These are represented by a net c.

£2.8bn deferred tax asset which is disclosed within the £2,911m deferred tax asset relating to tax losses in the table above.

The group is within the scope of the OECD Pillar Two model rules. The UK has enacted Pillar Two legislation which applies for accounting

periods beginning on or after 1 January 2024. Since the Pillar Two legislation was not effective for the current period, the group has no

related current tax exposure. Under the legislation, the group is liable to pay a top-up tax for the difference between its Global Anti-Base

Erosion (GloBE) effective tax rate per jurisdiction and the 15% minimum rate. As the UK rate of corporation tax from FY24 will be 25%,

and the group’s business is primarily in the UK, the impact of these rules on the group is not expected to be material.

What are our unrecognised tax losses and other temporary differences?

At 31 March 2024 we had operating losses and other temporary differences carried forward in respect of which no deferred tax assets

were recognised amounting to £3.7bn (FY23: £3.7bn). Our other temporary differences have no expiry date restrictions. The expiry date

of operating losses carried forward is dependent upon the tax law of the various territories in which the losses arose. A summary of expiry

dates for losses in respect of which restrictions apply is set out below:

At 31 March 2024	£m	Expiry
Restricted losses
Europe	—	2025 - 2043
Americas	372	2025 - 2033
Other	2	2025 - 2033
Total restricted losses	374
Unrestricted operating losses	3,080	No expiry
Other temporary differences	209	No expiry
Total	3,663

At 31 March 2024 we had UK capital losses carried forward in respect of which no deferred tax assets were recognised amounting to

£16.8bn (FY23: £16.8bn). These losses have no expiry date, but we consider the future utilisation of significant amounts of these losses to

be remote.

BT Group plc Annual Report 2024

166 Financial statements

Notes to the consolidated financial statements continued

10. Taxation continued

At 31 March 2024 the undistributed earnings of non-UK subsidiaries were £2.6bn (FY23: £2.5bn). No deferred tax liabilities have been

recognised in respect of these unremitted earnings because the group is in a position to control the timing of any dividends from

subsidiaries and hence any tax consequences that may arise. Under current tax rules, tax of £44m (FY23: £41m) would arise if these

earnings were to be repatriated to the UK.

11. Earnings per share

How is earnings per share calculated?

Basic earnings per share is calculated by dividing the profit after tax attributable to equity shareholders by the weighted average number

of shares in issue after deducting the own shares held by employee share ownership trusts and treasury shares.

In calculating the diluted earnings per share, share options outstanding and other potential shares have been taken into account where

the impact of these is dilutive.

Year ended 31 March	2024	2023
Basic weighted average number of shares (millions)	9,823	9,803
Dilutive shares from share options (millions)	39	83
Dilutive shares from share awards (millions)	136	171
Diluted weighted average number of shares (millions)	9,998	10,057
Basic earnings per share	8.7 p	19.4 p
Diluted earnings per share	8.6 p	18.9 p

The earnings per share calculations are based on profit after tax attributable to equity shareholders of the parent company which excludes

non-controlling interests. Profit after tax was £855m (FY23: £1,905m) and profit after tax attributable to non-controlling interests was

£nil (FY23: £4m). Profit attributable to non-controlling interests is not presented separately in the financial statements as it is not

material.

12. Dividends

What is the group’s dividend policy?

We have a progressive dividend policy to maintain or grow the dividend each year whilst taking into consideration a number of factors

including underlying medium-term earnings expectations and levels of business reinvestment.

What dividends have been paid?

A final dividend of 5.69p per share amounting to approximately £553m is proposed in respect of the year ended 31 March 2024 (FY23:

final dividend of 5.39p per share amounting to £530m paid in respect of the year ended 31 March 2023). An interim dividend of 2.31p per

share amounting to £227m was paid on 2 February 2024 (FY23: interim dividend of 2.31p per share amounting to £226m paid). This value

may differ from the amount shown for equity dividends paid in the group cash flow statement, which represents the actual cash paid in

relation to dividend cheques that have been presented over the course of the financial year.

	2024		2023
Year ended 31 March	pence per share	£m	pence per share	£m
Final dividend in respect of the prior year	5.39	530	5.39	527
Interim dividend in respect of the current year	2.31	227	2.31	226
	7.70	757	7.70	753

BT Group plc Annual Report 2024

167 Financial statements

10. Taxation continued

Material accounting policies that apply to intangible assets

We recognise identifiable intangible assets where we control the asset, it is probable that future economic benefits attributable to

the asset will flow to the group, and we can reliably measure the cost of the asset. We amortise all intangible assets, other than

goodwill, over their useful economic life. The method of amortisation reflects the pattern in which the assets are expected to be

consumed. If the pattern cannot be determined reliably, the straight-line method is used.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the identifiable net assets

(including intangible assets) of the acquired business. Our goodwill impairment policy is set out later in this note.

Acquired intangible assets – customer relationships and brands

Intangible assets such as customer relationships or brands acquired through business combinations are recorded at fair value at the

date of acquisition and subsequently carried at amortised cost. Assumptions are used in estimating the fair values of these

relationships or brands and include management’s estimates of revenue and profits to be generated by them.

Telecommunications licences

Licence fees paid to governments, which permit telecommunications activities to be operated for defined periods, are initially

recorded at cost and amortised from the time the network is available for use to the end of the licence period or where our usage can

extend beyond the initial licence period, over the period we expect to benefit from the use of the licences, which is typically 20 years.

Licences acquired through business combinations are recorded at fair value at the date of acquisition and subsequently carried at

amortised cost. The fair value is based on management’s assumption of future cash flows using market expectations at acquisition

date.

Computer software

Computer software comprises computer software licences purchased from third parties, and also the cost of internally developed

software. Computer software licences purchased from third parties are initially recorded at cost. We capitalise costs directly

associated with the production of internally developed software, including direct and indirect labour costs of development, only

where it is probable that the software will generate future economic benefits, the cost of the asset can be reliably measured and

technical feasibility can be demonstrated, in which case it is capitalised as an intangible asset on the balance sheet. Costs which do

not meet these criteria and research costs are expensed as incurred.

Our development costs which give rise to internally developed software include upgrading the network architecture or functionality

and developing service platforms aimed at offering new services to our customers.

Other

Other intangible assets include website development costs and other licences. Items are capitalised at cost and amortised on a

straight-line basis over their useful economic life or the term of the contract.

Estimated useful economic lives

The estimated useful economic lives assigned to the principal categories of intangible assets are as follows:

– Computer software 2 to 10 years

– Telecommunications licences 2 to 20 years

– Customer relationships and brands 1 to 15 years

Impairment of intangible assets

Intangible assets with finite useful lives are tested for impairment if events or changes in circumstances (assessed at each reporting

date) indicate that the carrying amount may not be recoverable. When an impairment test is performed, the recoverable amount is

assessed by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant cash

generating unit and the fair value less costs to dispose.

Goodwill is reviewed for impairment at least annually as described below. Impairment losses are recognised in the income statement,

as a specific item. If a cash generating unit is impaired, impairment losses are allocated firstly against goodwill, and secondly on a

pro-rata basis against intangible and other assets.

BT Group plc Annual Report 2024

168 Financial statements

Notes to the consolidated financial statements continued

13. Intangible assets

		Customer		Internally
		relationships	Telecoms	developed	Purchased
		a	b	c	c
	Goodwill	and brands	licences and other	software	software	Total
	£m	£m	£m	£m	£m	£m
Cost
At 1 April 2022	7,917	3,383	3,490	5,346	971	21,107
Additions	—	—	—	815	203	1,018
Disposals and adjustments	(21)	—	—	(466)	151	(336)
Transfers	—	—	—	30	(38)	(8)
Exchange differences	72	—	1	2	7	82
Transfers to assets held for sale	(13)	—	—	—	—	(13)
At 31 March 2023	7,955	3,383	3,491	5,727	1,294	21,850
Additions	—	—	—	732	206	938
Disposals and adjustments	(4)	(1)	(12)	(671)	298	(390)
Transfers	—	—	—	217	(95)	122
Exchange differences	(29)	—	(1)	(1)	(5)	(36)
At 31 March 2024	7,922	3,382	3,478	6,004	1,698	22,484
Accumulated amortisation
At 1 April 2022	—	2,469	908	3,595	326	7,298
Amortisation charge for the year	—	231	185	596	153	1,165
Impairment	—	—	—	—	—	—
Disposals and adjustments	—	—	1	(389)	79	(309)
Transfers	—	—	—	(56)	56	—
Exchange differences	—	—	1	1	7	9
Transfers to assets held for sale	—	—	—	—	—	—
At 31 March 2023	—	2,700	1,095	3,747	621	8,163
Amortisation charge for the year	—	231	185	762	70	1,248
Impairment	488	—	—	—	—	488
Disposals and adjustments	—	—	(13)	(462)	96	(379)
Transfers	—	—	—	(41)	90	49
Exchange differences	—	—	(1)	—	(4)	(5)
At 31 March 2024	488	2,931	1,266	4,006	873	9,564
Carrying amount
At 31 March 2023	7,955	683	2,396	1,980	673	13,687
At 31 March 2024	7,434	451	2,212	1,998	825	12,920

a Customer relationships and brands relate to customer relationships recognised on acquisition of EE.

b Telecoms licences and other primarily represents spectrum licences. These include 2100 MHz licence with book value of £593m (FY23: £643m), 1800 MHz with book value of

£544m (FY23: £590m), 700Mhz with book value of £266m (FY23: £281m), 3400 MHz with book value of £226m (FY23: £242m) and 2600 MHz with book value of £185m (FY23:

£206m). Spectrum licences are being amortised over a period between 14 and 20 years.

c Includes a carrying amount of £623m (FY23: £1,125m) in respect of assets under construction, which are not yet amortised.

d Disposals and adjustments include the removal of assets from the group’s fixed asset registers following disposals and the identification of fully amortised assets (including £0.3bn in

FY24 through operation of the group’s annual asset verification exercise).

e For a breakdown of assets held for sale see note 22.

f During FY24, assets with cost of £122m and accumulated depreciation of £49m were reclassified from property, plant and equipment to intangible assets following review of asset

registers.

BT Group plc Annual Report 2024

169 Financial statements

13. Intangible assets continued

Impairment of goodwill

Material accounting policies that apply to impairment of goodwill

We perform an annual goodwill impairment review.

Goodwill recognised in a business combination does not generate cash flows independently of other assets or groups of assets. As a

result, the recoverable amount, being the value in use, is determined at a cash generating unit (CGU) level. These CGUs represent

the smallest identifiable groups of assets that generate cash inflows that are largely independent of the cash inflows from other

groups of assets. Our CGUs are deemed to be Consumer and Business.

We allocate goodwill to each of the CGUs that we expect to benefit from the business combination. Each CGU to which goodwill is

allocated represents the lowest level within the group at which the goodwill is monitored for internal management purposes.

The value in use of each CGU is determined using risk-adjusted cash flow projections derived from financial plans approved by the

Board covering a five-year period. They reflect management’s risk-adjusted expectations of revenue, EBITDA growth, capital

expenditure, working capital and operating cash flows, based on past experience and future expectations of business performance.

Cash flows beyond the fifth year have been extrapolated using perpetuity growth rates.

Significant judgements and critical accounting estimates made in reviewing goodwill for

impairment

Determining our CGUs

The determination of our CGUs is judgemental. The identification of CGUs involves an assessment of whether the asset or group of

assets generate largely independent cash inflows. This involves consideration of how our core assets are operated and whether these

generate independent revenue streams.

In FY23 our CGUs were aligned with the Consumer, Enterprise and Global customer-facing units in existence at the time. From

1 April 2023 the Enterprise and Global units are managed and reported as a single combined unit, Business. Financial information

is provided to the Executive Committee on a consolidated basis only, and there have been material changes to the structure and

organisation of the combined Business unit following the merger.

During FY24 we have reviewed the identification of our CGUs in light of the creation of Business. We concluded that the Enterprise

and Global CGUs have been replaced with a single Business CGU. In reaching this conclusion we considered the way in which the

combined unit is monitored and the degree of integration within the combined unit, specifically in relation to revenue streams and its

asset base. This conclusion also reflects the fact that the cash flows of the legacy Enterprise and Global units are no longer

independent and it is no longer possible to report the performance of these units on an individual basis.

Accordingly, our CGUs are Consumer and Business from 1 April 2023, aligned with the corresponding CFUs and operating segments

(note 4).

Estimating value in use

Our value in use calculations require estimates in relation to uncertain items, including management’s expectations of future revenue

growth, operating costs, profit margins, operating cash flows and the discount rate for each CGU. Future cash flows used in the value

in use calculations are on a nominal basis and based on risk-adjusted projections derived from the latest Board-approved five-year

financial plans, representing management's best risk-adjusted estimate of future growth. This includes the direct and indirect

impacts of inflation and associated mitigations. Expectations about future growth reflect the expectations of growth in the markets

to which the CGU relates and consideration of the overall variability relating to individual assumptions at the unit level. The future

cash flows are discounted using a pre-tax nominal discount rate that reflects current market assessments of the time value of money.

The discount rate used in each CGU is adjusted for the risk specific to the asset, including the countries in which cash flow will be

generated, for which the future cash flow estimates have not been adjusted.

Estimating terminal growth

A long term growth rate into perpetuity is applied immediately at the end of the five year forecast period. We calculate this for each

CGU as the lower of the nominal GDP growth rate forecasts and the long-term compound annual growth rate as estimated by

management. Long-term compound annual growth rates may be lower than forecast nominal GDP growth rates due to market-

specific factors including inflation expectations, the regulatory environment and competition intensity.

We tested our goodwill for impairment as at 31 March 2024. The carrying value of goodwill and the key assumptions used in performing

the annual impairment assessment and sensitivities are disclosed below.

BT Group plc Annual Report 2024

170 Financial statements

Notes to the consolidated financial statements continued

13. Intangible assets continued

	Consumer	Legacy Enterprise	Legacy Global	Business	Total
Cost	£m	£m	£m	£m	£m
At 1 April 2022	3,900	3,573	444	—	7,917
Transfer	—	—	—	—	—
Acquisitions and disposals	(26)	4	1	—	(21)
Exchange differences	—	4	68	—	72
Transfer to assets held for sale	—	(4)	(9)	—	(13)
At 31 March 2023	3,874	3,577	504	—	7,955
Transfer	—	(3,577)	(504)	4,081	—
Impairment	—	—	—	(488)	(488)
Acquisitions and disposals	—	—	—	(4)	(4)
Exchange differences	—	—	—	(29)	(29)
Transfer to assets held for sale	—	—	—	—	—
At 31 March 2024	3,874	—	—	3,560	7,434

Of the £4.1bn attributable to the Business CGU at 31 March 2023, £2.6bn relates to the acquisition of EE in 2016 with the rest relating to

historical small acquisitions.

Outcome of our annual impairment review

Our FY24 impairment testing exercise concluded that there is significant headroom in our Consumer CGU, consistent with FY23.

The carrying value of the Business CGU exceeded its value in use by £488m. We have therefore booked an impairment charge equivalent

to this amount in the income statement, presented as a specific item (note 9). No impairment was recognised in FY23.

Historical trends including the transition from legacy products indicate risk within forecasts which we have made appropriate adjustment

for in line with IAS 36, so as to arrive at a risk adjusted estimate of future economic conditions which reflects long-term viability and

trading risks inherent in delivering against the group’s strategic pillars.

At the same time, to acknowledge this risk we have reduced terminal growth rate applied to cash flows when calculating the terminal

value. We have also excluded uncommitted restructuring costs and benefits including those that relate to the group-wide restructuring

programmes. The combined impact of these adjustments has led to a value in use for IAS 36 impairment testing purposes that is indicative

of an impairment. Calculating the value in use has involved the application of assumptions and estimates that have had a material impact

on the impairment charge recognised. Management judge that the Board-approved forecasts used to calculate value in use support the

carrying amount of the Business CGU as at 31 March 2024. We consider below the impact of reasonably possible alternatives in the next

12 months.

What discount rate have we used?

The pre-tax discount rates applied to the cash flow forecasts are derived from our post-tax weighted average cost of capital. The

assumptions used in the calculation of the group’s weighted average cost of capital are benchmarked to externally available data. The

pre-tax discount rate used in performing the value in use calculation for Consumer was 9.25% in FY24 and 9.4% in FY23. We have used a

slightly higher rate of 9.27% for Business. This reflects the higher risk countries in which it operates, which in FY23 were part of the Global

CGU. In FY23 we used a discount rate of 9.4% for Enterprise and 9.7% for Global, again reflecting the higher risk from countries in which it

operates. The reduction in discount rates in FY24 reflects that the cash flows, rather than the discount rate, have been risk adjusted.

What growth rates have we used?

The perpetuity growth rates are determined based on the forecast market growth rates of the regions in which the CGU operates, and

reflect an assessment of the long-term growth prospects of that market. The growth rates have been benchmarked against external data

for the relevant markets and analysts’ expectations. None of the growth rates applied exceed the expected average long-term growth

rates for those markets or sectors. In FY24 we have used a perpetuity growth rate of 1.0% for Consumer and 0.7% for the Business CGU. In

FY23 the perpetuity growth rate was 2.0% for Enterprise and Consumer, and 2.4% for Global.

Key assumptions applied to testing goodwill allocated to the Business CGU

Key assumptions that value in use is most sensitive to are EBITDA growth over the 5-year forecast period; the long term growth rate for

the terminal period; and the weighted average cost of capital used to discount cash flows.

– Our value in use assumes risk-adjusted EBITDA compound annual growth of 0.7% over the 5-year forecast period. The growth rate is

the projected adjusted EBITDA growth rate on the cash flow forecasts used in our goodwill impairment model and reflect the growth

and maturity of the industry we operate in and historical trends. Compound annual growth rates are risk-adjusted to the compound

annual growth rates used in our Board-approved forecasts.

– Application of the terminal growth rate of 0.7%, equivalent to compound annual growth within the terminal period, is viewed as a key

assumption with c.75% of the value in use derived from terminal cash flows.

– Value in use is sensitive to the weighted average cost of capital used to discount future cash flows.

The table below shows the sensitivity of the £488m impairment recognised to reasonably possible changes in key assumptions:

	Low scenario	High scenario
EBITDA compound annual growth rate +/- 1%	(£1,260m) more impairment	£374m less impairment
Long term growth rate +/- 0.7%	(£478m) more impairment	£488m less impairment
Weighted average cost of capital +/- 1%	(£865m) more impairment	£488m less impairment

BT Group plc Annual Report 2024

171 Financial statements

13. Intangible assets continued

Other sensitivities applicable to the Business CGU

Applying a severe but plausible downside scenario, reflecting a plan that we are highly confident will be achieved or exceeded, based on

the same risk population would result in a further impairment charge of £2,430m in addition to the £488m recognised. Management

consider that it is reasonably possible to expect that actual future cash flows will outperform the risk-adjusted cash flows modelled for the

purpose of testing goodwill impairment. A less conservative view of risks and opportunities in the base case of our forecast would result in

headroom of approximately £2,083m rather than the impairment charge booked.

14. Property, plant and equipment

Material accounting policies that apply to property, plant and equipment

Our property, plant and equipment is included at historical cost, net of accumulated depreciation, government grants and any

impairment charges. Property, plant and equipment acquired through business combinations is initially recorded at fair value and

subsequently accounted for on the same basis as our existing assets. We derecognise items of property, plant and equipment on

disposal or when no future economic benefits are expected to arise from the continued use of the asset. The difference between the

sale proceeds and the net book value at the date of disposal is recognised in operating costs in the income statement.

Included within the cost of network infrastructure and equipment are direct and indirect labour costs, materials and directly

attributable overheads.

We depreciate property, plant and equipment on a straight-line basis from the time the asset is available for use, to write off the

asset’s cost over the estimated useful life taking into account any expected residual value. Freehold land is not depreciated.

Estimated useful economic lives

The estimated useful lives assigned to principal categories of assets are as follows:

Land and buildings

– Freehold buildings 14 to 50 years

– Short-term leasehold improvements Shorter of 10 years or lease term

– Leasehold land and buildings Shorter of unexpired portion of lease or 40 years

Network infrastructure

Transmission equipment

– Duct 40 years

– Cable 3 to 25 years

– Fibre 5 to 20 years

Exchange equipment 2 to 13 years

Other network equipment 2 to 20 years

Other assets

– Motor vehicles 2 to 10 years

– Computers and office equipment 3 to 7 years

Residual values and useful lives are reassessed annually and, if necessary, changes are recognised prospectively.

Network share assets

Certain assets have been contributed to a network share arrangement by both EE and Hutchison 3G UK Limited, with legal title

remaining with the contributor. This is considered to be a reciprocal arrangement. Our share of the assets on acquisition of EE was

recognised at fair value within tangible assets, and depreciated in line with policy. Subsequent additions are recorded at cost.

Impairment of property, plant and equipment

We test property, plant and equipment for impairment if events or changes in circumstances (assessed at each reporting date)

indicate that the carrying amount may not be recoverable. When an impairment test is performed, we assess the recoverable

amount by reference to the higher of the net present value of the expected future cash flows (value in use) of the relevant asset and

the fair value less costs to dispose. If it is not possible to determine the recoverable amount for the individual asset then we assess

impairment by reference to the relevant cash generating unit as described in note 13 .

BT Group plc Annual Report 2024

172 Financial statements

Notes to the consolidated financial statements continued

13. Intangible assets continued

Building Digital UK (BDUK) government grants

We receive government grants in relation to BDUK and other rural superfast broadband contracts. Where we have achieved certain

service levels, or delivered the network more efficiently than anticipated, we have an obligation to either re-invest or repay grant

funding. Where this is the case, we recognise deferred income in respect of the funding that will be re-invested or repaid, and make a

corresponding adjustment to the carrying amount of the related property, plant and equipment.

Assessing the timing of whether and when we change the estimated take-up assumption is judgemental as it involves considering

information which is not always observable. Our consideration on whether and when to change the base case assumption is

dependent on our expectation of the long-term take-up trend.

Our assessment of how much grant income to defer includes consideration of the difference between the take-up percentage

agreed with the local authority and the likelihood of actual take-up. The value of the government grants deferred is disclosed in

note 17.

		Network infrastructure
	Land and	Held by	Held by	a	Assets under
	buildings	Openreach	other units	Other	construction	Total
	£m	£m	£m	£m	£m	£m
Cost
At 1 April 2022	1,022	31,276	24,439	1,444	1,446	59,627
Additions	7	—	129	7	3,947	4,090
Transfers	89	2,617	913	211	(3,822)	8
Disposals and adjustments	31	(118)	(183)	(33)	(70)	(373)
Transfer to assets held for sale	—	—	(108)	(13)	—	(121)
Exchange differences	16	—	99	6	1	122
At 31 March 2023	1,165	33,775	25,289	1,622	1,502	63,353
Additions	6	1	73	12	3,851	3,943
Transfers	85	2,562	906	279	(3,954)	(122)
Disposals and adjustments	(95)	(208)	(2,198)	(162)	137	(2,526)
Transfer to assets held for sale	—	—	—	—	—	—
Exchange differences	(11)	—	(66)	(5)	(1)	(83)
At 31 March 2024	1,150	36,130	24,004	1,746	1,535	64,565
Accumulated depreciation
At 1 April 2022	621	17,476	20,050	1,025	—	39,172
Depreciation charge for the year	50	1,466	1,144	218	—	2,878
Impairment	—	—	—	11	—	11
Transfers	—	195	(192)	(4)	—	(1)
Disposals and adjustments	32	(139)	(133)	(36)	—	(276)
Transfer to assets held for sale	—	—	(106)	(11)	—	(117)
Exchange differences	13	—	91	7	—	111
At 31 March 2023	716	18,998	20,854	1,210	—	41,778
Depreciation charge for the year	55	1,489	1,085	263	—	2,892
Impairment	—	78	—	—	30	108
Transfers	—	—	(49)	—	—	(49)
Disposals and adjustments	(30)	(134)	(2,222)	(174)	—	(2,560)
Transfer to assets held for sale	—	—	—	—	—	—
Exchange differences	(9)	—	(61)	(5)	—	(75)
At 31 March 2024	732	20,431	19,607	1,294	30	42,094
Carrying amount
At 31 March 2023	449	14,777	4,435	412	1,502	21,575
Engineering stores	—	—	—	—	92	92
Total at 31 March 2023	449	14,777	4,435	412	1,594	21,667
At 31 March 2024	418	15,699	4,397	452	1,505	22,471
Engineering stores	—	—	—	—	91	91
Total at 31 March 2024	418	15,699	4,397	452	1,596	22,562

a Other mainly comprises motor vehicles, computers and fixtures and fittings.

b Net of government grants of £91m (FY23: £150m).

c Disposals and adjustments include the removal of assets from the group’s fixed asset registers following disposals and the identification of fully depreciated assets (including £2.2bn

in FY24 through operation of the group’s annual asset verification exercise). They also include adjustments between gross cost and accumulated depreciation following review of

fixed asset registers, and adjustments resulting from changes in assumptions used in calculating lease-end obligations where the corresponding asset is capitalised.

d Transfers to assets held for sale are detailed in note 22.

e During FY24, assets with cost of £122m and accumulated depreciation of £49m were reclassified from property, plant and equipment to intangible assets following review of asset

registers.

BT Group plc Annual Report 2024

173 Financial statements

14. Property, plant and equipment continued

Included within the disclosure are assets used in arrangements which represent core business activities for the group and which meet the

definition of operating leases:

– £15,699m (FY23: £14,777m) of the carrying amount of the network infrastructure asset class represents Openreach’s network

infrastructure. The majority of the associated assets are used to deliver fixed-line telecommunications services that have been assessed

as containing operating leases, to both internal and external communications providers. Network infrastructure held by Openreach is

presented separately in the table above; however it is not practicable to separate out infrastructure not used in operating lease

arrangements.

– Other assets includes devices with a carrying amount of £160m (FY23: £163m) that are made available to retail customers under

arrangements that contain operating leases. These are not presented separately in the table above as they are not material relative to

the group’s overall asset base.

The carrying amount of land and buildings, including leasehold improvements, comprised:

	2024	2023
At 31 March	£m	£m
Freehold	71	80
Leasehold	347	369
Total land and buildings	418	449

Network infrastructure

Some of our network assets are jointly controlled by EE Limited with Hutchison 3G UK Limited. These relate to shared 3G network and

certain elements of network for 4G rural sites. The net book value of the group’s share of assets controlled by its joint operation MBNL is

£759m (FY23: £721m) and is recorded within network infrastructure.

Within network infrastructure are assets with a net book value of £11.5bn (FY23: £10.9bn) which have useful economic lives of more than

18 years.

BT Tower

In FY24 we agreed to the sale of the BT Tower for headline consideration of £275m, as part of the simplification of the group’s property

portfolio.

The carrying amount of the BT Tower asset is £4m at 31 March 2024. It is not considered to meet the IFRS 5 criteria for classification as

held for sale at the reporting date, reflecting the extent of decommissioning work needed to provide vacant possession of the site.

The useful economic lives of assets associated with the BT Tower have been reassessed in light of the anticipated disposal in FY30.

Significant judgements made in accounting for the BT Tower sale

Exchange of contracts in respect of the BT Tower sale with MCR Hotels occurred during FY24, with transfer of legal title anticipated

to take place in a three year window between 2028 and 2031 subject to achieving vacant possession of the site. We will continue to

enjoy exclusive rights to occupy and access the site prior to completion. The delay between exchange and completion reflects the

extensive work required to decommission the site.

We have exercised significant judgement in concluding that control over BT Tower passes to the buyer at the point of completion

rather than exchange. In doing so we performed a detailed assessment of the restrictions placed on BT’s use of the asset in the

period following exchange, as well as the transaction pricing structure, and concluded that they were insufficient to represent a

transfer to the buyer of sufficiently all the risks and rewards associated with ownership. We placed particular weight on the fact that

legal title to the site does not transfer to the buyer until the point of completion. Had we concluded that control had passed on

exchange of contracts in FY24, the transaction would have been treated as a sale and leaseback with profit on disposal recognised in

the period and associated derecognition of the BT Tower asset and accounting for the leaseback.

Low carbon fleet

As reported in our TCFD statement on page 78, we’re working hard and investing to convert the majority of our fleet to electric or zero

emission vehicles by the end of FY31. This plan does not trigger a significant impairment of fleet assets as substantially all non-electric

vehicles held by the group at 31 March 2024 will be fully depreciated ahead of FY31.

BT Group plc Annual Report 2024

174 Financial statements

Notes to the consolidated financial statements continued

14. Property, plant and equipment continued

Material accounting policies that apply to leases

Identifying whether a lease exists

At inception of a contract, we determine whether the contract is, or contains, a lease. A lease exists if the contract conveys the right

to control the use of an identified asset, for a period of time, in exchange for consideration. In making this assessment, we consider

whether:

– The contract involves the use of an identified asset, either explicitly or implicitly. The asset must be physically distinct or represent

substantially all the capacity of a physically distinct asset. Assets that a supplier has a substantive right to substitute are not

considered distinct.

– The lessee (either the group, or the group’s customers) has the right to obtain substantially all the economic benefits from the use

of the asset throughout the period of use; and

– The lessee has the right to direct the use of the asset, in other words, has the decision-making rights that are most relevant to

changing how and for what purpose the asset is used.

Where practicable, and by class of underlying asset, we have elected to account for leases containing a lease component and one or

more non-lease components as a single lease component. Where this election has been taken, it has been applied to the entire asset.

Lessee accounting

We recognise a lease liability and right-of-use asset at the commencement of the lease.

Lease liabilities are initially measured at the present value of lease payments that are due over the lease term, discounted using the

group’s incremental borrowing rate.

The lease term is the non-cancellable period of the lease adjusted for the impact of any extension options that we are reasonably

certain that the lessee will exercise, or termination options that we are reasonably certain that the lessee will not exercise.

The incremental borrowing rate is the rate that we would have to pay for a loan of a similar term, and with similar security, to obtain

an asset of similar value.

Lease payments include:

– fixed payments

– variable lease payments that depend on an index or rate

– amounts expected to be paid under residual value guarantees

– the exercise price of any purchase options that we are reasonably certain to exercise

– payments due over optional renewal periods where we are reasonably certain to renew

– penalties for early termination of the lease where we are reasonably certain to terminate early

Lease liabilities are subsequently measured at amortised cost using the effective interest method. They are remeasured if there is a

change in future lease payments, including changes in the index or rate used to determine those payments, or the amount we expect

to be payable under a residual value guarantee.

We also remeasure lease liabilities where the lease term changes. This occurs when the non-cancellable period of the lease changes,

or on occurrence of a significant event or change in circumstances within the control of the lessee and which changes our initial

assessment in regard to whether the lessee is reasonably certain to exercise extension options or not to exercise termination options.

Where the lease term changes we remeasure the lease liability using the group’s incremental borrowing rate at the date of

reassessment. Where a significant event or change in circumstances does not occur, the lease term remains unchanged and the

carrying amounts of the lease liability and associated right-of-use asset will decline over time.

Right-of-use assets are initially measured at the initial amount of the corresponding lease liabilities, adjusted for any prepaid lease

payments, plus any initial direct costs incurred and an estimate of any decommissioning costs that have been recognised as

provisions, less any lease incentives received. They are subsequently depreciated using the straight-line method to the earlier of the

end of the useful life of the asset or the end of the lease term. Right-of-use assets are tested for impairment following the policy set

out in note 14 and are adjusted for any remeasurement of lease liabilities.

We have elected not to recognise lease liabilities and right-of-use assets for short-term leases that have a lease term of 12 months

or less, and leases of low-value assets with a purchase price under £5,000. We recognise payments for these items as an expense on

a straight-line basis over the lease term.

Any variable lease payments that do not depend on an index or rate, such as usage-based payments, are recognised as an expense in

the period to which the variability relates.

BT Group plc Annual Report 2024

175 Financial statements

15. Leases

Lessor accounting

At inception or on modification of a contract that contains a lease component, we allocate the consideration in the contract to each

lease component on the basis of their relative stand-alone prices.

When we act as a lessor, we determine at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, we make an overall assessment of whether the lease transfers substantially all the risks and rewards incidental

to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of

this assessment, we consider certain indicators such as whether the lease is for the major part of the economic life of the asset.

When we are an intermediate lessor, we account for our interests in the headlease and the sublease separately. We assess the lease

classification of a sublease with reference to the right-of-use asset arising from the headlease, not with reference to the underlying

asset. If a headlease is a short-term lease to which we apply the exemption described above, then we classify the sublease as an

operating lease.

If an arrangement contains lease and non-lease components, then we apply IFRS 15 to allocate the consideration in the contract.

We apply the derecognition and impairment requirements in IFRS 9 to the net investment in the lease. We further regularly review

estimated unguaranteed residual values used in calculating the gross investment in the lease.

We recognise lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other

revenue’.

Significant judgements made in accounting for leases

The lease term is a key determinant of the size of the lease liability and right-of-use asset recognised where the group acts as lessee;

and the deferral period for any upfront connection charges where the group acts as lessor. Determining the lease term requires

judgement to evaluate whether we are reasonably certain the lessee will exercise extension options or will not exercise termination

options. Key facts and circumstances that create an incentive to exercise those options are considered; these include:

– Our anticipated operational, retail and office property requirements in the mid and long term.

– The availability of suitable alternative sites.

– Costs or penalties associated with exiting lease arrangements relative to the benefits to be gained, including costs of removing

leasehold improvements or relocating, and indirect costs such as disruption to business.

– Significant investments in leased sites, in particular those with useful lives beyond the lease term.

– Costs associated with extending lease arrangements including rent increases during secondary lease periods.

Our definition of ‘reasonable certainty’, and therefore the lease term, will often align with the judgements made in our medium-term

plan, in particular for leases of non-specialised property and equipment on rolling (or ‘evergreen’) arrangements that continue until

terminated and which can be exited without significant penalty.

Following initial determination of the lease term, we exercise judgement in evaluating whether events or changes in circumstances

are sufficiently significant to change the initial assessment of whether we are reasonably certain the lessee will exercise extension

options or will not exercise termination options; and in the subsequent reassessment of the lease term.

Key judgements exercised in setting the lease term

The quantum of the lease liability and right-of-use asset currently recognised on our balance sheet is most significantly affected by

the judgement exercised in setting the lease term for the arrangement under which the bulk of our operational UK property estate is

held. Setting the lease term for our leased cell sites has also involved the use of judgement, albeit to a lesser degree.

BT Group plc Annual Report 2024

176 Financial statements

Notes to the consolidated financial statements continued

15. Leases continued

UK operational property portfolio

Substantially all of our leased property estate is held under an arrangement which can be terminated in 2031, at which point we may

either vacate some or all properties or purchase the entire estate. If neither option is taken the lease continues to the next unilaterally

available break point in 2041. The lease liability recognised for the arrangement reflects a lease end date of 2031.

On initial recognition we concluded that, although the majority of these properties are expected to be needed on a long-term basis,

we couldn’t be reasonably certain that we wouldn’t exercise the termination option or that we would exercise the purchase option. In

coming to this conclusion, we had due regard to material sub-lease arrangements relating to the estate.

As time progresses our assessment may change; if this happens, we will remeasure the lease liability and right-of-use asset to reflect

either the rentals due for any properties we will continue to occupy, or the cost of purchasing the estate, using an updated discount

rate. There would be no overall impact on net assets.

If the assessment were to change at the balance sheet date of 31 March 2024:

– Exercising the purchase option would lead to an estimated increase in the lease liability and right-of-use asset of between £3bn

and £5bn.

– Continuing to lease the estate beyond 2031 until the next available break in 2041 would lead to an estimated increase in the lease

liability and right-of-use asset of between £1bn and £2bn.

Our assessment will be directly linked to future strategic decisions, which will be resolved at some time prior to 2031, around the

development of the fixed network and the associated rationalisation of our exchange estate. The breadth of the ranges reflects the

significant uncertainty around key variables used to determine cash outflows, especially future inflation and which properties the

group will be able to exit prior to or in 2031.

Estimates are based on discounted cash outflows and do not reflect the likely and significant impact of cash inflows generated from

the disposal, repurposing or subleasing of properties retained post-2031.

We are permitted to hand a limited number of properties back to the lessor prior to 2031. On initial adoption of IFRS 16 we were not

reasonably certain which properties would be handed back and as such the lease term did not reflect the exercise of these options.

Subsequently we exercise judgement in identifying significant events that trigger reassessment of our initial conclusion. We exercise

similar judgement in identifying events triggering reassessment of whether we are reasonably certain we will not exercise termination

options associated with other leased properties.

In doing so we consider decisions associated with our ongoing workplace rationalisation programme, in particular decisions to exit a

particular location or lease an alternative property. Generally we remain reasonably certain that we will not exercise a termination

option until implementation of the associated business plan has progressed to a stage that we are committed to exiting the property.

At that point we reassess the lease term by reference to the time we expect to remain in occupation of the property and any notice

period associated with exercise of the option.

Cell sites

Most of the liability recognised in respect of leased cell sites relates to multi-site arrangements with commercial providers. The

fixed-term nature of these arrangements means it has not been necessary to exercise significant judgement when determining the

lease term. Where the arrangements offer extension options we have been required to conclude whether the options are reasonably

certain to be exercised. Although the balance sheet could be materially affected by the conclusion reached in regard to these

options, we have not been required to exercise a significant degree of judgement in arriving at the lease term having regard to the

period of time covered by the options, the difficulty in predicting the group’s long-term network requirements, and the relatively

high threshold that ‘reasonably certain' represents.

A smaller proportion of the cell site liability relates to arrangements with individual landlords which are either rolling or can be exited

with notice. When setting the initial lease term for these arrangements we exercised significant judgement in establishing the period

that we are reasonably certain to require use of the site. We broadly aligned lease terms with our medium-term planning horizon

after assessing the relative strengths of the following factors:

– Long-term economic incentives to remain on sites including existing capital improvements;

– A need to maintain flexibility in our ability to develop and manage our network infrastructure to react quickly to technological

developments and evolving capacity requirements; and

– Incentives to renegotiate arrangements in the medium term to gain more security over sites to support future capital investment.

Although significant judgement has been exercised in determining the lease term, reaching an alternative conclusion would not have

a material impact on the balance sheet having regard to the most feasible alternative lease terms.

Subsequently, we consider key events that trigger reassessment of lease terms to be developments which resolve uncertainty

around our economic incentive to remain on individual sites in the long term. These are primarily lease renegotiations and significant

capital investments, for example that associated with our 5G rollout and other capital refresh programmes.

BT Group plc Annual Report 2024

177 Financial statements

15. Leases continued

Right-of-use assets

Most of our right-of-use assets are associated with our leased property portfolio, specifically our office, retail and exchange estate. We

also lease a significant proportion of our network infrastructure, including mobile cell and switch sites.

		Network
	Land and buildings	infrastructure	Motor vehicles	Other	Total
	£m	£m	£m	£m	£m
At 1 April 2022	3,941	110	369	9	4,429
Additions	203	16	150	2	371
Depreciation charge for the year	(521)	(32)	(131)	(5)	(689)
Impairment b	(75)	—	—	—	(75)
Transfer to assets held for sale	(3)	—	—	—	(3)
Other movements	(49)	1	(3)	(1)	(52)
At 31 March 2023	3,496	95	385	5	3,981
Additions	271	40	179	1	491
Depreciation charge for the year	(493)	(33)	(121)	(5)	(652)
Impairment b	(10)	—	—	—	(10)
Other movements	(108)	(4)	(56)	—	(168)
At 31 March 2024	3,156	98	387	1	3,642

a Additions comprise increases to right-of-use assets as a result of entering into new leases, and upwards remeasurement of existing leases arising from lease extensions or

reassessments and increases to lease payments.

b Impairment charges relates primarily to the early exit of leases as a result of ongoing property rationalisation activity.

c Other movements primarily relate to terminated leases and downwards remeasurements of right-of-use assets arising from reductions or reassessments of lease terms and

decreases in lease payments.

Lease liabilities

Lease liabilities recognised are as follows:

	2024	2023
Year ended 31 March	£m	£m
Current	766	800
Non-current	4,189	4,559
	4,955	5,359

The following amounts relating to the group’s obligations under lease arrangements were recognised in the income statement in the year:

– Interest expense of £134m (FY23: £133m) on lease liabilities.

– Variable lease payments of £39m (FY23: £38m) which are not dependent on an index or rate and which have not been included in the

measurement of lease liabilities.

Expenses relating to leases of low-value assets and short-term leases for which no right-of-use asset or lease liability has been recognised

were not material.

The total cash outflow for leases in the year was £882m (FY23: £860m). Our cash flow statement and normalised free cash flow

reconciliation present £748m (FY23: £727m) of the cash outflow as relating to the principal element of lease liability payments, with the

remaining balance of £134m (FY23: £133m) presented within interest paid.

Note 28 presents a maturity analysis of the payments due over the remaining lease term for lease liabilities currently recognised on the

balance sheet. This analysis only includes payments to be made over the reasonably certain lease term. Cash outflows are likely to exceed

these amounts as payments will be made on optional periods that we do not currently consider to be reasonably certain, and in respect of

leases entered into in future periods.

BT Group plc Annual Report 2024

178 Financial statements

Notes to the consolidated financial statements continued

15. Leases continued

Other information relating to leases

At 31 March 2024 the group was committed to future minimum lease payments of £55m (FY23: £145m) in respect of leases which have

not yet commenced and for which no lease liability has been recognised.

The following table analyses cash payments to be received across the remaining term of operating lease arrangements where BT is lessor:

	To be recognised as	To be recognised as other
	revenue (note 5)	operating income (note 6)	Total
At 31 March 2024	£m	£m	£m
Less than one year	431	17	448
One to two years	117	11	128
Two to three years	41	11	52
Three to four years	10	9	19
Four to five years	9	3	12
More than five years	—	5	5
Total undiscounted lease payments	608	56	664
At 31 March 2023
Less than one year	416	19	435
One to two years	131	15	146
Two to three years	46	15	61
Three to four years	13	14	27
Four to five years	10	13	23
More than five years	—	20	20
Total undiscounted lease payments	616	96	712

a Future operating lease income to be recognised as revenue primarily relates to income from Openreach's fixed access subscription services which meet the definition of leases under

IFRS 16 and which typically are expected to have a lease period terms of one year or less.

16. Trade and other receivables

Material accounting policies that apply to trade and other receivables

Trade receivables are recognised where the right to receive payment from customers is conditional only on the passage of time. We

initially recognise trade and other receivables at fair value, which is usually the original invoiced amount. They are subsequently

carried at amortised cost using the effective interest method. The carrying amount of these balances approximates to fair value due

to the short maturity of amounts receivable.

We provide services to consumer and business customers, mainly on credit terms. We know that certain debts due to us will not be

paid through the default of a small number of our customers. Because of this, we recognise an allowance for doubtful debts on initial

recognition of receivables, which is deducted from the gross carrying amount of the receivable. The allowance is calculated by

reference to credit losses expected to be incurred over the lifetime of the receivable. In estimating a loss allowance we consider

historical experience and informed credit assessment alongside other factors such as the current state of the economy and particular

industry issues. We consider reasonable and supportable information that is relevant and available without undue cost or effort.

Once recognised, trade receivables are continuously monitored and updated. Allowances are based on our historical loss

experiences for the relevant aged category as well as forward-looking information and general economic conditions. Allowances are

calculated by individual CFUs in order to reflect the specific nature of the customers relevant to that CFU.

The group utilises factoring arrangements for selected trade receivables. Trade receivables that are subject to debt factoring

arrangements are derecognised if they meet the conditions for derecognition detailed in IFRS 9 ‘Financial instruments’ and the

related cash flows received are presented as cash flows from operating activities.

Contingent assets such as any insurance recoveries which we expect to recoup, have not been recognised in the financial statements

as these are only recognised within trade and other receivables when their receipt is virtually certain.

BT Group plc Annual Report 2024

179 Financial statements

15. Leases continued

	2024	2023
At 31 March	£m	£m
Current
Trade receivables	1,899	1,395
Prepayments	586	545
Accrued income	162	158
Deferred contract costs	383	369
Finance lease receivables	31	29
Amounts due from joint ventures	163	268
Other assets	341	296
	3,565	3,060
Non-current
Deferred contract costs	229	211
Finance lease receivables	107	98
Other assets	305	194
	641	503

a Other assets comprise Flex Pay receivables, prepayments and £57m (FY23: £70m) of deferred cash consideration mainly relating to the disposal of BT Sport, see note 22 .

Amounts due from joint ventures relates to a sterling Revolving Credit Facility (RCF) provided to the Sports JV, see note 30. The expected

loss provision is immaterial.

Trade receivables are stated after deducting allowances for doubtful debts, as follows:

	2024	2023
	£m	£m
At 1 April	168	223
Expense	129	84
Utilised	(127)	(142)
Exchange differences	(1)	3
At 31 March	169	168

The expected credit loss allowance for trade receivables was determined as follows:

					Past due and not specifically impaired
		Trade
		receivables
		specifically	Between	Between	Between
		impaired net	0 and 3	3 and 6	6 and 12	Over 12
	Not past due	of provision	months	months	months	months	Total
At 31 March	£m	£m	£m	£m	£m	£m	£m
2024
Expected loss rate %	1%	50%	8%	28%	47%	65%	8%
Gross carrying amount	1,448	4	357	81	64	114	2,068
Loss allowance	(11)	(2)	(29)	(23)	(30)	(74)	(169)
Net carrying amount	1,437	2	328	58	34	40	1,899
2023
Expected loss rate %	1%	75%	10%	46%	41%	52%	11%
Gross carrying amount	1,030	20	265	48	59	141	1,563
Loss allowance	(8)	(15)	(26)	(22)	(24)	(73)	(168)
Net carrying amount	1,022	5	239	26	35	68	1,395

Trade receivables not past due and accrued income are analysed below by CFU.

		Trade receivables not past due	Accrued income
	2024	2023	2024	2023
At 31 March	£m	£m	£m	£m
Consumer	375	309	81	82
Business	900	713	4	2
Openreach	161	—	75	70
Other	1	—	2	4
Total	1,437	1,022	162	158

a Comparatives for the year ended 31 March 2023 have been re-presented for the impact of the creation of our Business customer-facing unit, formed through the merger of our

Enterprise and Global units, see note 1.

Given the broad and varied nature of our customer base, the analysis of trade receivables not past due and accrued income by CFU is

considered the most appropriate disclosure of credit concentrations.

BT Group plc Annual Report 2024

180 Financial statements

Notes to the consolidated financial statements continued

16. Trade and other receivables continued

Deferred contract costs

Material accounting policies that apply to deferred contract costs

We capitalise certain costs associated with the acquisition and fulfilment of contracts with customers and amortise them over the

period that we transfer the associated services.

Connection costs are deferred as contract fulfilment costs because they allow satisfaction of the associated connection performance

obligation and are considered recoverable. Sales commissions and other third party contract acquisition costs are capitalised as

costs to acquire a contract unless the associated contract term is less than 12 months, in which case they are expensed as incurred.

Capitalised costs are amortised over the minimum contract term. A portfolio approach is used to determine contract term.

Where the initial set-up, transition and transformation phases of long-term contractual arrangements represent distinct

performance obligations, costs in delivering these services are expensed as incurred. Where these services are not distinct

performance obligations, we capitalise eligible costs as a cost of fulfilling the related service. Capitalised costs are amortised on a

straight-line basis over the remaining contract term, unless the pattern of service delivery indicates a more appropriate profile. To be

eligible for capitalisation, costs must be directly attributable to specific contracts, relate to future activity, and generate future

economic benefits. Capitalised costs are regularly assessed for recoverability.

The following table shows the movement on deferred costs:

		Deferred contract	Deferred contract
	Deferred connection	acquisition costs –	acquisition costs –	Transition and
	costs	commissions	dealer incentives	transformation	Total
	£m	£m	£m	£m	£m
At 1 April 2022	24	124	324	90	562
Additions	15	100	285	70	470
Amortisation	(15)	(94)	(276)	(67)	(452)
Impairment	—	(1)	(1)	—	(2)
Other	(2)	2	(2)	4	2
At 31 March 2023	22	131	330	97	580
Additions	10	134	315	57	516
Amortisation	(11)	(118)	(292)	(56)	(477)
Impairment	—	(2)	(7)	—	(9)
Other	(8)	2	3	5	2
At 31 March 2024	13	147	349	103	612

BT Group plc Annual Report 2024

181 Financial statements

16. Trade and other receivables continued

Material accounting policies that apply to trade and other payables

We initially recognise trade and other payables at fair value, which is usually the original invoiced amount. We subsequently carry

them at amortised cost using the effective interest method.

We use a supply chain financing programme to extend payment terms with a limited number of suppliers to a more typical payment

term. We also use a separate supply chain financing programme to allow suppliers to receive funding earlier than the invoice due

date. We assess these arrangements against indicators to assess if debts which vendors have sold to the funder under the supplier

financing schemes continue to meet the definition of trade payables or should be classified as borrowings. At 31 March 2024 under

the terms of the arrangement the funder's payment to the supplier does not legally extinguish our obligation to the supplier so it

remains within trade and other payables. Cash flows only occur when the trade payable is extinguished and are therefore presented

in cash flows from operating activities.

	2024	2023
At 31 March	£m	£m
Current
Trade payables	4,119	4,196
Other taxation and social security	544	581
Minimum guarantee with sports joint venture a	194	195
Accrued expenses	543	458
Deferred income	355	532
Other payables	572	602
	6,327	6,564
Non-current
Minimum guarantee with sports joint venture a	271	465
Deferred income	342	403
Other payables	24	52
	637	920

a Liability recognised on the minimum revenue guarantee in BT’s distribution agreement with the sports joint venture (see note 22). Movement in the liability driven by £211m

payments made during the year less £16m finance cost recorded from unwinding the impact of discounting.

b Deferred income includes £106m (FY23: £258m) current and £122m (FY23: £169m) non-current liabilities relating to Building Digital UK, for which grants received by the group

may be subject to re-investment or repayment depending on the level of take-up.

c Includes £41m relating to an estimate of customer refunds, refer to note 5.

Current trade and other payables at 31 March 2024 include:

– £101m (31 March 2023: £348m) of trade payables that have been factored in a supply chain financing programme. The facility size of

£350m remains consistent with prior periods. These programmes are used with a limited number of suppliers with short payment terms

to extend them to a more typical payment term.

– £224m (31 March 2023: £169m) of trade payables in a separate supply chain financing programme that allows suppliers the

opportunity to receive funding earlier than the invoice due date. Financial institutions are used to support this programme but we

continue to recognise the underlying payables as we continue to cash settle the supplier invoices in accordance with their terms.

BT Group plc Annual Report 2024

182 Financial statements

Notes to the consolidated financial statements continued

17. Trade and other payables

Our provisions principally relate to obligations arising from property rationalisation programmes, restructuring programmes, asset

retirement obligations, network assets, third party claims, litigation and regulatory risks. Contingent liabilities primarily arise from litigation

and regulatory matters that are not sufficiently certain to meet the criteria for recognition as provisions.

Material accounting policies that apply to provisions & contingent liabilities

We recognise provisions when the group has a present legal or constructive obligation as a result of past events, it is probable that an

outflow of resources will be required to settle the obligation and the amount can be reliably estimated.

Where these criteria are not met we disclose a contingent liability if the group has a possible obligation, or has a present obligation

with an outflow that is not probable or which cannot be reliably estimated.

Provisions are determined by discounting the expected future cash flows at a nominal pre-tax rate that reflects current market

assessments of the time value of money and the risks specific to the liability. Cash flows are adjusted for the effect of inflation where

appropriate.

Significant judgements made in identifying contingent liabilities

Contingent liabilities are not recognised as liabilities on our balance sheet. By their nature, contingencies will be resolved only when

one or more uncertain future events occur or fail to occur. We assess the likelihood that a potential claim or liability will arise and also

quantify the possible range of financial outcomes where this can be reasonably determined.

In identifying contingent liabilities we make key judgements in relation to applicable law and any historical and pending court rulings,

and the likelihood, timing and cost of resolution.

Establishing contingent liabilities associated with litigation brought against the group may involve the use of significant judgements

and assumptions, in particular around the ability to form a reliable estimate of any probable outflow. We provide further information

in relation to specific matters in the ‘contingent liabilities' section below.

Key accounting estimates and significant judgements made in accounting for provisions

We exercise judgement in determining the quantum of all provisions to be recognised. Our assessment includes consideration of

whether we have a present obligation, whether payment is probable and if so whether the amount can be estimated reliably.

When measuring provisions we reflect the impact of inflation as appropriate, particularly in relation to our property, asset retirement

obligation and third party claims provisions. Although this involves a degree of estimation, it does not represent a significant source

of estimation uncertainty having regard to the quantum of the balances in question and the anticipated timing of outflows.

Property provisions relate to obligations arising in relation to our property portfolio, in particular costs to restore leased properties on

vacation where this is required under the lease agreement. In measuring property provisions, we have made estimates of the costs

associated with the restoration of properties by reference to any relevant guidance such as rate cards. Cash outflows occur as and

when properties are vacated and the obligations are settled.

Asset retirement obligations (AROs) relate to obligations to dismantle equipment and restore network sites on vacation of the site.

The provision represents the group’s best estimate of the costs to dismantle equipment and restore the sites. Obligations are settled

as and when sites are vacated and the timing is largely influenced by the group’s network strategy.

Our regulatory provision represents our best estimate of the cost to settle our present obligation in relation to historical regulatory

matters. The charge/credit for the year represents the outcome of management’s re-assessment of the estimates and regulatory

risks across a range of issues, including price and service issues. The prices at which certain services are charged are regulated and

may be subject to retrospective adjustment by regulators. When estimating the likely value of regulatory risk we make key

judgements, including in regard to interpreting Ofcom regulations and past and current claims. The precise outcome of each matter

depends on whether it becomes an active issue, and the extent to which negotiation or regulatory and compliance decisions will

result in financial settlement. The ultimate liability may vary from the amounts provided and will be dependent upon the eventual

outcome of any settlement.

Litigation provisions represent the best estimate to settle present obligations recognised in respect of claims brought against the

group. The estimate reflects the specific facts and circumstances of each individual matter and any relevant external advice

received. Provisions recognised are inherently judgemental and could change over time as matters progress.

Third party claims provisions (previously described as insurance provisions) represent our exposure to claims from third parties, with

latent disease claims from former colleagues and motor vehicle claims making up the majority of the balance. We engage an

independent actuary to provide an estimate of the most likely outcomes in respect of latent disease and third party motor vehicle

accident claims, and our in-house insurance teams review our exposure to other risks.

Other provisions do not include any individually material provisions.

For all risks, the ultimate liability may vary materially from the amounts provided and will be dependent upon the eventual outcome

of any settlement.

BT Group plc Annual Report 2024

183 Financial statements

18. Provisions & contingent liabilities

		Network			Third party
	Property	ARO	Regulatory	Litigation	claims	Other	Total
	£m	£m	£m	£m	£m	£m	£m
At 1 April 2022	142	181	65	85	92	108	673
Additions	43	—	16	6	35	15	115
Unwind of discount	1	3	—	—	—	—	4
Utilised	(8)	(4)	(1)	(41)	(30)	(7)	(91)
Released	(37)	(87)	(16)	(9)	(43)	(42)	(234)
Transfers	—	—	4	—	132	(11)	125
Exchange differences	1	—	—	3	1	1	6
At 31 March 2023	142	93	68	44	187	64	598
Additions	42	42	72	—	73	9	238
Unwind of discount	1	4	—	—	1	—	6
Utilised	(15)	(6)	(37)	(1)	(75)	(3)	(137)
Released	(17)	—	(17)	—	(32)	(3)	(69)
Transfers	4	—	—	—	—	10	14
Exchange differences	(1)	—	—	—	—	—	(1)
At 31 March 2024	156	133	86	43	154	77	649

a Transfers relate to the reclassification of balances previously presented in other payables (note 17) following reassessment of the level of certainty over the timing and amount of any

outflow of resources.

	2024	2023
At 31 March	£m	£m
Analysed as:
Current	238	229
Non-current	411	369
	649	598

Contingent liabilities and legal proceedings

In the ordinary course of business, we are periodically notified of actual or threatened litigation, and regulatory and compliance matters

and investigations. We have disclosed below a number of such matters including any matters where we believe a material adverse impact

on the operations or financial condition of the group is possible and the likelihood of a material outflow of resources is more than remote.

Where the outflow of resources is considered probable, and a reasonable estimate can be made of the amount of that obligation, a

provision is recognised for these amounts and reflected in the table above. Where an outflow is not probable but is possible, or a

reasonable estimate of the obligation cannot be made, a contingent liability exists.

In respect of each of the claims below, the nature and progression of such proceedings and investigations can make it difficult to predict

the impact they will have on the group. There are many reasons why we cannot make these assessments with certainty, including, among

others, that they are in early stages, no damages or remedies have been specified, and/or the often slow pace of litigation.

Class action claim – landline only services

In January 2021, Justin Le Patourel, represented by law firm Mishcon de Reya applied to the Competition Appeal Tribunal to bring a

proposed class action claim for damages they estimated at £608m (inclusive of compound interest) or £589m (inclusive of simple

interest) alleging anti-competitive behaviour through excessive pricing by BT to customers with certain residential landline services.

Ofcom considered this topic in 2017. At that time, Ofcom’s final statement made no finding of excessive pricing or breach of competition

law more generally but we implemented a voluntary commitment to reduce prices for customers that have a BT landline only and not to

increase those prices beyond inflation (CPI). In September 2021 the Competition Appeal Tribunal certified the claim to proceed to a

substantive trial on an opt-out basis (class members are automatically included in the claim unless they choose to opt-out). In July 2023

Justin Le Patourel amended his claim seeking increased damages estimated at £1,338m (inclusive of compound interest) or £1,309m

(inclusive of simple interest), later revised to £1,307m (inclusive of compound interest) or £1,278m (inclusive of simple interest). A

hearing took place between January and March 2024 and we are awaiting judgment. At the reporting date we are not aware of any

evidence to indicate that a present obligation exists such that any amount should be provided for.

Class action claim – combined mobile and handset services

In November 2023, Justin Gutmann, represented by law firm Charles Lyndon applied to the Competition Appeal Tribunal to bring a

proposed class action claim for damages estimated at £1.1bn (inclusive of simple interest) on behalf of customers who purchased

combined handset and airtime contracts who are outside their minimum contract terms but who continue to pay the same price as during

their minimum contract terms. The claim alleges this approach was an anti-competitive abuse of a dominant position. Similar claims have

also been brought against Vodafone, Three and O2 with the total damages claimed £3.285bn (inclusive of simple interest). At the

reporting date we are not aware of any evidence to indicate that a present obligation exists such that any amount should be provided for.

Class actions must be certified by the Competition Appeal Tribunal at a Collective Proceedings Order (CPO) hearing before proceeding to

a substantive trial. A first case management conference to determine next procedural steps is scheduled for 23 May 2024. If the class

action is certified the substantive trial will not conclude during FY25. BT intends to defend itself vigorously.

Italian business

Milan Public Prosecutor prosecutions: In FY20 proceedings were initiated against BT Italia for certain potential offences, namely the

charge of having adopted, from 2011 to 2016, an inadequate management and control organisation model for the purposes of Articles 5

and 25 of Legislative Decree 231/2001. BT Italia disputed this and maintained in a defence brief filed in April 2019 that: (a) BT Italia did

not gain any interest or benefit from the conduct in question; and (b) in any event, it had a sufficient organisational, management and

BT Group plc Annual Report 2024

184 Financial statements

Notes to the consolidated financial statements continued

18. Provisions & contingent liabilities continued

audit model that was circumvented/overridden by individuals acting in their own self-interest. The trial commenced on 26 January 2021.

On 23 April 2021, the Court allowed some parties to be joined to the criminal proceedings as civil parties (‘parte civile’) – a procedural

feature of the Italian criminal law system. These claims were directed at certain individual defendants (which include former BT/ BT Italia

employees). Those parties successfully joined BT Italia as a respondent to their civil claims (‘responsabile civile’) on the basis that it is

vicariously responsible for the individuals’ wrongdoing.

The first instance phase of the trial has now concluded with the Court handing down its decision on 25 January 2024. The Court convicted

certain individuals (including certain former BT Italia employees) for manipulation of BT Italia’s financial statements for the financial year

ending 31 March 2016 and for fraud against an Italian company, Sed Multitel S.r.l. The Court dismissed all charges that had been brought

against BT Italia but ordered that BT Italia indemnify certain individual minority shareholders in the company and Sed Multitel for their

losses. The Court has not quantified the indemnification amount, such that the indemnified parties must now seek to recover these

amounts from BT Italia by agreement or separate civil proceedings. The quantum of those claims, if they are pursued successfully, is not

anticipated to be material.

Accounting misstatement claims: a law firm acting on behalf of a group of investors has made claims under s.90A of the Financial Services

& Markets Act 2000, alleging that untrue or misleading statements were made in relation to the historical irregular accounting practices in

BT’s Italian business (which have been the subject of previous disclosures). No value is stated and the matter is in the early stages. As

mentioned in our earlier reports, the accounting issues in Italy have previously been the subject of class actions in the US that were

dismissed by the US courts.

Phones 4U

Since 2015 the administrators of Phones 4U Limited have made allegations that EE and other mobile network operators colluded to

procure Phones 4U’s insolvency. Legal proceedings for an unquantified amount were issued in December 2018 by the administrators. The

trial on the question of liability/breach ran from May to July 2022. In November 2023 the High Court dismissed Phones 4U’s claim in its

entirety. Phones 4U has subsequently appealed that judgment to the Court of Appeal and a hearing is expected in May 2025. We continue

to dispute these allegations vigorously.

UK Competition and Markets Authority (CMA) investigation

On 12 July 2022 the CMA opened a competition law investigation into BT and other companies involved in the purchase of freelance

services for the production and broadcasting of sports content in the UK. The investigation is focused on BT Sport. In February 2023, the

CMA extended its investigation to include suspected breaches of competition law in relation to the employment of staff supporting the

production and broadcasting of sports content in the UK however in March 2024 the CMA confirmed this limb of its investigation would

not be progressed. The CMA has said no assumption should be made at this stage that competition law has been infringed. BT is

cooperating with the investigation.

19. Retirement benefit plans

Background to BT Group’s pension plans

The group has both Defined Benefit and Defined Contribution retirement benefit plans. The group’s main plans are in the UK:

– The BT Pension Scheme (BTPS) is the largest UK Defined Benefit plan sponsored by BT Group, constituting 97% of BT Group’s IAS 19

liability. It was closed to future benefit accrual in 2018 for the majority of members, and has 55,000 deferred members and 210,000

pensioners. All BTPS members receive pension benefits at retirement based on salary and years of service; some members also receive

a lump sum payment at retirement. Increases for the majority of benefits are linked to either the Retail Price Index (RPI) or the

Consumer Price Index (CPI).

– The EE Pension Scheme (EEPS) has a Defined Benefit section that was closed to future benefit accrual in 2014 and a Defined

Contribution section which was closed to future accrual in July 2023. The Defined Benefit section constitutes 2% of BT Group’s IAS 19

liability.

– The BT Retirement Saving Scheme (BTRSS) is a Defined Contribution, contract-based, plan operated by Standard Life which new UK

employees join. There are around 67,000 employees currently contributing to the BTRSS.

The group also has retirement arrangements around the world in line with local markets and culture; the principal ones being in the

Netherlands and Germany.

Types of retirement benefit plans

Defined Benefit (DB) plans

DB plan benefits are determined by the plan rules, typically dependent on factors such as years of service and pensionable pay, but

not on the value of actual contributions made by the group or members. The group is exposed to investment and other experience

risks and may need to make additional contributions where it is estimated that the benefits will not be met from assets held, regular

contributions and expected investment income.

The net defined benefit liability, or deficit, is the present value of all expected future benefit cash flows to be paid by each plan,

calculated using the projected unit credit method by professionally qualified actuaries (also known as the Defined Benefit

Obligation, DBO or liabilities) less the fair value of the plan assets. A net defined benefit asset, or surplus, occurs when the fair value

of assets exceeds the liabilities.

Defined Contribution (DC) plans

DC plan benefits are linked to the value of each member’s fund, which is based on contributions paid and the performance of each

individual’s chosen investments. The group has no exposure to investment and other experience risks (including longevity).

BT Group plc Annual Report 2024

185 Financial statements

18. Provisions & contingent liabilities continued

Amounts in the financial statements

Group income statement

The expense arising from the group’s retirement benefit arrangements as recognised in the group income statement is shown below.

	2024	2023
Year ended 31 March	£m	£m
Recognised in the income statement before specific items (note 6)
– Service cost:
– DB plans	12	17
– DC plans	541	537
– Past service cost/(credit)	—	(2)
– Administration expenses and PPF levy	29	38
Subtotal	582	590
Recognised in the income statement as specific items (note 9)
– Costs to close BTPS and provide transition payments a for affected employees	—	13
– Interest on pensions deficit	121	18
Subtotal	121	31
Total recognised in the income statement	703	621

a All employees impacted by the closure of the BTPS were eligible for transition payments from the date of closure into their BTRSS pot for a period linked to the employee’s age.

Group balance sheet

The net defined benefit liability in respect of defined benefit plans reported in the group balance sheet is set out below. Plans in surplus

are presented within non-current assets and plans in deficit within non-current liabilities.

		2024			2023
			Surplus/			Surplus/
			a	Assets	Liabilities	(Deficit)
	Assets	Liabilities	(Deficit)
At 31 March	£m	£m	£m	£m	£m	£m
Recognised in non-current liabilities
BTPS	35,391	(40,038)	(4,647)	38,673	(41,575)	(2,902)
Unfunded plans	—	(88)	(88)	—	(92)	(92)
Other funded plans	33	(180)	(147)	65	(210)	(145)
Sub-total	35,424	(40,306)	(4,882)	38,738	(41,877)	(3,139)
Recognised in non-current assets
EEPS	769	(710)	59	749	(713)	36
Funded plans	361	(350)	11	321	(305)	16
Sub-total	1,130	(1,060)	70	1,070	(1,018)	52
Total	36,554	(41,366)	(4,812)	39,808	(42,895)	(3,087)

a Figures shown net of a £4m adjustment in relation to IFRIC 14. With the exception of some of the group's smaller plans, the group is not required to limit any pension surplus or

recognise additional pension liabilities in individual plans as economic benefits are available in the form of either future refunds or reductions to future contributions. For example, a

refund of surplus is available following the gradual settlement of the liabilities over time when there are no members remaining in the BTPS or EEPS.

The table below shows the group’s defined benefit liability net of tax.

	2024	2023
At 31 March	£m	£m
Balance sheet position (net of tax)
Surplus/(deficit)	(4,812)	(3,087)
Deferred tax asset (note 10)	968	618
Total (net of tax)	(3,844)	(2,469)

BT Group plc Annual Report 2024

186 Financial statements

Notes to the consolidated financial statements continued

19. Retirement benefit plans continued

Movements in defined benefit plan assets and liabilities

The table below shows the movements in the defined benefit plan assets and liabilities and shows where they are reflected in the financial

statements.

	Assets	Liabilities	Deficit
	£m	£m	£m
At 31 March 2022	54,937	(56,080)	(1,143)
Service cost (including administration expenses and PPF levy)	(38)	(17)	(55)
Past service credit	—	2	2
Interest on net pension deficit	1,480	(1,498)	(18)
Included in the group income statement			(71)
Return on plan assets below the amount included in the group income statement	(14,911)	—	(14,911)
Actuarial gain arising from changes in financial assumptions	—	12,279	12,279
Actuarial gain arising from changes in demographic assumptions	—	891	891
Actuarial (loss) arising from experience adjustments	—	(1,135)	(1,135)
Included in the group statement of comprehensive income			(2,876)
Regular contributions by employer	22	—	22
Deficit contributions by employer	994	—	994
Included in the group cash flow statement			1,016
Contributions by employees	1	(1)	—
Benefits paid	(2,686)	2,686	—
Other (e.g. foreign exchange)	9	(22)	(13)
Other movements			(13)
At 31 March 2023	39,808	(42,895)	(3,087)
Service cost (including administration expenses and PPF levy)	(29)	(12)	(41)
Past service credit	—	—	—
Interest on net pension deficit	1,886	(2,007)	(121)
Included in the group income statement			(162)
Return on plan assets below the amount included in the group income statement	(3,140)	—	(3,140)
Actuarial gain arising from changes in financial assumptions	—	563	563
Actuarial gain arising from changes in demographic assumptions	—	652	652
Actuarial (loss) arising from experience adjustments	—	(519)	(519)
Included in the group statement of comprehensive income			(2,444)
Regular contributions by employer	55	—	55
Deficit contributions by employer	823	—	823
Included in the group cash flow statement			878
Contributions by employees	—	—	—
Benefits paid	(2,840)	2,840	—
Other (e.g. foreign exchange)	(9)	12	3
Other movements			3
At 31 March 2024	36,554	(41,366)	(4,812)

a Primarily reflects the impact on the liabilities of actual inflation being higher than assumed at the prior reporting date, which has been broadly offset by increases to inflation-linked

assets from higher inflation.

How is the BTPS governed and managed?

BT Pension Scheme Trustees Limited (the Trustee) has been appointed by BT Group as an independent trustee to administer and manage

the BTPS on behalf of the members in accordance with the terms of the BTPS Trust Deed and Rules and relevant legislation (principally

the Pensions Acts of 1993, 1995, 2004 and 2021). The Trustee’s key powers include setting the investment strategy of BTPS (after

consultation with BT Group) and agreeing with BT Group the actuarial assumptions to be used when assessing the BTPS funding position

and the resulting contributions that will be paid.

There are nine Trustee directors, all of whom are appointed by BT Group, as illustrated below. Trustee directors are usually appointed for a

three-year term but are then eligible for re-appointment.

Chair of the Trustee directors Member nominated Trustee directors Employer nominated Trustee directors

Appointed by BT after consultation

with, and with the agreement of,

the relevant trade unions.

Appointed by BT based on

nominations by trade unions.

Appointed by BT. Two normally hold senior

positions within the group and two normally

hold (or have held) senior positions in

commerce or industry .

BT Group plc Annual Report 2024

187 Financial statements

19. Retirement benefit plans continued

BTPS IAS 19 assets

Critical accounting estimates and significant judgements made when valuing the BTPS assets

Under IAS 19, plan assets are measured at fair value at the balance sheet date and include quoted and unquoted investments.

Valuation of main quoted investments

– Equities listed on recognised stock exchanges are valued at closing bid prices.

– Bonds that are regularly traded are valued using broker quotes, based on sale/bid prices.

– Exchange traded derivative contracts are valued based on closing bid prices.

Valuation of main unquoted investments

A portion of unquoted investments are valued based on inputs that are not directly observable, which require more judgement. The

assumptions used in valuing unquoted investments are affected by market conditions.

– Equities are valued using the International Private Equity and Venture Capital (IPEVC) guidelines where the most significant

assumptions are the discount rate and earnings assumptions.

– Property investments are valued on the basis of open market value by an independent valuer using RICS guidelines. The significant

assumptions used in the valuation are rental yields and occupancy rates.

– Bonds, including those issued by BT Group, that are not regularly traded are valued by an independent valuer using pricing models

making assumptions for credit risk, market risk and market yield curves.

– Holdings in investment funds are typically valued at the Net Asset Value provided by the fund administrator or investment

manager. The significant assumption used in the valuation is the Net Asset Value.

– Infrastructure investments are valued by an independent valuer using a model-based valuation such as a discounted cash flow

approach, or at the price of recent market transactions if they represent fair value. Where a discounted cash flow model is used,

the significant assumptions used in the valuation are the discount rate and the expected cash flows.

– Over the counter derivatives are valued by an independent valuer using cash flows discounted at market rates. The significant

assumptions used in the valuation are the yield curves and cost of carry.

– The BTPS entered into a longevity insurance contract in 2014, and a second in August 2023. The two longevity insurance contracts

are valued by discounting the fixed cash flows payable by the BTPS and the floating cash flows payable by the insurers under the

contracts (projected by an actuary, consistent with the terms of the contracts). The significant assumptions used to value the

assets are the discount rate (set as a margin above a risk-free rate to reflect credit and liquidity risk) and the mortality

assumptions.

£5.7bn of unquoted investments that are formally valued periodically by the investment manager have a latest valuation that

precedes the balance sheet date. These assets consist of: £2.4bn non-core credit; £1.0bn mature infrastructure; £1.2bn private

equity; £0.9bn secure income assets; and £0.2bn property. These valuations have been adjusted for cash movements between the

previous valuation date and 31 March 2024. The valuation approach and inputs for these investments would only be approximately

updated where there were indications of significant movements, for example implied by public market indicators. No such

adjustment was required at 31 March 2024.

Asset-Backed Funding (ABF) arrangement

The ABF arrangement, issued to the BTPS in May 2021, has a fair value of £1.2bn at 31 March 2024 (FY23: £1.3bn) calculated as the

present value of the future stream of payments, allowing for the probability of the BTPS becoming fully funded and therefore the

payments to the BTPS ending early. It is not recognised as a pension asset when measuring the group’s IAS 19 net defined benefit

liability as it is a non-transferable financial instrument issued by the group.

How are the BTPS assets invested?

The Trustee regularly reviews the allocation of assets between different investment classes, taking into account current market conditions

and trends. The allocations reflect the Trustee’s views on a range of areas, including: i) the balance between seeking returns and incurring

risk; ii) the extent to which the assets should be allocated to match movements in the liabilities due to changes in interest rates, inflation

and/or longevity (i.e. liability-driven investments, or LDI); iii) the extent to which the assets should provide cash flows to meet expected

payments to beneficiaries; and iv) liquidity needed to meet benefit payments and collateral requirements for derivatives contracts.

Financial derivatives (e.g. swaps) are used to reduce the mismatch between movements in the liabilities and the assets from changes in

interest rates, inflation, longevity, and exchange rates. This provides greater stability in the funding position, and therefore the deficit

contributions that may be required from BT Group. The sensitivity chart on page 194 shows how the use of some of these derivatives

adjusts outcomes for the BTPS. While the use of derivatives reduces funding risk, it increases the BTPS’s liquidity requirements which is

factored into the overall investment strategy. Following the impact of the September 2022 mini-budget on derivatives, the Bank of

England and the Pensions Regulator issued guidance on the minimum level of collateral pension schemes should hold. At 31 March 2024

(and 31 March 2023), the BTPS held more collateral than these minimum levels.

The table below analyses the fair value of the BTPS assets by asset category, subdivided by valuations based on a quoted market price in

an active market, and those that are not (such as investment funds).

BT Group plc Annual Report 2024

188 Financial statements

Notes to the consolidated financial statements continued

19. Retirement benefit plans continued

		2024		2023
		Total	of which	Total	of which
		a		assets	quoted
		assets	quoted
At 31 March		£bn	£bn	£bn	£bn
Growth
Equities	UK	0.1	—	0.1	—
	Overseas Developed	2.3	1.1	1.7	0.6
	Emerging Markets	—	—	—	—
Private Equity		1.3	—	1.1	—
Property	UK	2.3	—	2.6	—
	Overseas	0.6	—	0.8	—
Other growth assets	Absolute Return	1.2	—	0.9	—
	Non-Core Credit	4.2	0.4	4.2	0.4
	Mature Infrastructure	1.0	—	1.2	—
Liability matching
Government bonds	UK	14.6	14.5	13.2	13.1
Investment grade credit	Global	10.3	7.7	10.4	8.2
Secure income assets		4.0	—	3.7	—
Cash, derivatives and other Cash balances		0.8	—	3.0	—
Financial derivative contracts		(4.9)	—	(4.2)	—
Longevity insurance contract f		(0.9)	—	(0.8)	—
Other h		(1.5)	—	0.8	—
Total		35.4	23.7	38.7	22.3

a At 31 March 2024, the BTPS held nil (FY23: nil) equity issued by the group and £1.7bn (FY23: £1.6bn) of bonds issued by the group.

b This allocation seeks to generate a positive return in all market conditions.

c This allocation includes a range of credit investments, including emerging market, sub-investment grade and unrated credit. The allocation seeks to exploit investment opportunities

within credit markets using the expertise of a range of specialist investment managers.

d Around 77% (FY23: 72%) of these are index-linked gilts with the remainder in conventional gilts.

e This allocation consists of assets which aim to provide the BTPS with contractual bond-like income, often inflation-protected. The assets include property, infrastructure and

investment-grade private credit.

f The value reflects experience to date on the contract from higher than expected deaths; this has partly offset a corresponding reduction in BTPS’s liabilities over the same period.

g Other balances comprise net amounts receivable/(payable) by the BTPS, including balances due to investment counterparties relating to repurchase agreements.

h Of which held in the co-investment vehicle: £0.1bn (FY23: <£1m).

BTPS IAS 19 Liabilities

Critical accounting estimates and significant judgements made when valuing our

pension liabilities

The measurement of the service cost and the liabilities involves judgement about uncertain events including the life expectancy of

members, price inflation and the discount rate used to calculate the net present value of the future pension payments. We use

estimates for all of these uncertain events. Our assumptions reflect historical experience, market expectations (where relevant),

actuarial advice and our judgement regarding future expectations at the balance sheet date. While assumptions are made for these

events, actual benefit payments in a given year may be higher or lower than the assumption, for example if members retire sooner or

later than assumed. The liabilities are the present value of the future expected benefit payments.

What are the forecast benefits payable from the BTPS?

There are c.265,000 members, and their dependants, who will be receiving benefits from the BTPS for the remainder of their lives.

Members currently receiving pension benefits make up around 73% of the liabilities and 79% of the membership by number.

BT Group plc Annual Report 2024

189 Financial statements

19. Retirement benefit plans continued

The chart below illustrates how the forecast benefits payable from the BTPS, and IAS 19 liabilities, projected using the IAS 19 assumptions

evolve over time.

The estimated duration of the BTPS liabilities, which is an indicator of the weighted average term of the discounted future payments, is

11 years (FY23: 12 years) using the IAS 19 assumptions. The duration is sensitive to the assumptions and has reduced mainly due to the

increase in bond yields, and therefore discount rate, over the year.

What are the most significant assumptions, and how have they been set?

The most significant financial assumptions used to calculate the IAS 19 liabilities for the BTPS are the discount rate and inflation. The most

significant demographic assumption used is how life expectancy will evolve over time which is illustrated as forecast life expectancies in

the table below.

At 31 March	2024	2023
Discount rate	4.90%	4.85%
Inflation – RPI	3.25%	3.35%
Inflation – CPI	2.80%	2.85%
Life expectancy – male aged 60 in lower pension bracket	24.9 years	24.7 years
Life expectancy – male aged 60 in higher pension bracket	26.7 years	26.9 years
Life expectancy – female aged 60	27.4 years	27.5 years
Average additional life expectancy for a male member retiring at age 60 in 10 years’ time	0.4 years	0.4 years

While the financial assumptions are typically scheme-specific, the average financial assumptions weighted by liabilities across all schemes

are within 0.05% of the figures shown in the table above.

BT Group plc Annual Report 2024

190 Financial statements

Notes to the consolidated financial statements continued

19. Retirement benefit plans continued

The table below summarises how these assumptions have been set, including key changes over the year.

	Detail
Discount rate	The discount rate assumption is calculated by applying the projected BTPS benefit cash flows to a corporate bond yield
	curve constructed by our external actuary based on the yield on AA-rated £-denominated corporate bonds at the balance
	sheet date. In setting the yield curve, judgement is required on the selection of appropriate bonds to be included in the
	universe and the approach used to then derive the yield curve.
	The increase in the discount rate over the year reflects changes in the market yield of corporate bonds.
RPI and CPI	RPI inflation expectations are calculated by applying the projected BTPS benefit cash flows to an inflation curve derived
inflation	from market yields on UK government bonds, and making a deduction for an inflation risk premium (to reflect the extra
	premium paid by investors for inflation linked assets) of 0.2% p.a. before 2030 and 0.3% p.a. thereafter.
	CPI inflation expectations are set with reference to the RPI inflation assumption taking into account market data and
	independent estimates of the expected difference. Before 2030, CPI inflation is assumed to be 1.0% lower than RPI
	inflation (FY23: 1.0%). RPI will be aligned with CPIH from 2030, and we assume a nil gap between CPI and CPIH inflation
	as historically these measures have been broadly comparable.
Pension	Under the BTPS rules, benefit increases prior to retirement are primarily linked to CPI capped at 5%, and the majority of
increases	benefits increase after retirement linked to either CPI for Sections A and B or RPI with a 5% cap for Section C. Benefits are
	assumed to increase in line with the RPI or CPI inflation assumptions.
Longevity	The longevity assumption takes into account:
	–	the actual mortality experience of the BTPS pensioners, based on a formal review carried out for the 2023 triennial
		funding valuation; and
	–	future improvements in longevity based on the CMI’s 2022 Mortality Projections model published by the UK actuarial
		profession.
	There is significant uncertainty for future life expectancy assumptions following the Covid-19 pandemic. We continue to
	assume that following the pandemic there is a short-term increase in deaths compared to the assumptions adopted prior
	to the pandemic and we have fully allowed for population mortality data from 2022, but not data from 2020 and 2021.
	Allowing for the published 2022 CMI model has reduced the BTPS liabilities by £0.4bn.
	We continue to assume mortality will improve in the long-term by 1% per year.

Risks to BT Group arising from the BTPS

Background

A large increase in our pension scheme obligations could lead to an increased deficit, resulting in additional contributions being required,

potentially impacting our business plans. Changes in factors, such as bond yields, life expectancy or inflation can have an impact on the IAS

19 and funding assumptions, impacting the measurement of BTPS liabilities. These factors can also impact the BTPS assets. A summary of

changes and potential impacts is set out in the table below.

BT Group plc Annual Report 2024

191 Financial statements

19. Retirement benefit plans continued

Change in	Impact
Government	A fall in government bond yields will:
bond yields	–	increase the IAS 19 liabilities, driven by the fall in the discount rate; and
	–	increase the assets, driven by an increase in the value of government bonds, corporate bonds and interest rate
		derivatives held by the BTPS.
Credit spreads	A fall in credit spreads will lead to a fall in corporate bond yields, and therefore an increase in the IAS 19 liabilities and a
	corresponding but smaller increase in both asset values and funding liabilities.
Inflation	A significant proportion of the benefits paid to members are currently increased in line with RPI or CPI inflation. The risk
expectations	of high inflation is limited by caps on some of the inflationary increases under the BTPS rules e.g. benefit increases prior
	to retirement are primarily linked to CPI capped at 5%, and for Section C members benefits primarily increase after
	retirement in line with RPI with a 5% cap.
	Changes in average inflation expectations over the lifetime of the plan
	An increase in average inflation expectations will:
	–	increase the IAS 19 liabilities; and
	–	increase the value of index-linked bonds, other inflation linked assets and inflation derivatives held by the BTPS.
	Changes in inflation over the next year
	If inflation over the next year is lower or higher than assumed, it would lead to a fall or increase in the IAS 19 liabilities. We
	estimate the change in asset values will broadly offset the movement in both the IAS 19 liabilities and funding liabilities.
	If inflation is higher than the caps that apply to benefits, the assets will increase by more than the liabilities. Similarly, in a
	deflationary environment, the asset values are expected to fall by more than the IAS 19 liabilities and funding liabilities
	since the payments on index-linked gilts would be reduced but pensions paid by the BTPS would not necessarily fall to
	fully offset the fall in asset values.
	Hedging CPI benefits
	The BTPS primarily holds RPI inflation-linked assets and derivatives to hedge inflation-linked benefits. Around two-
	thirds of the inflation-linked benefits increase with reference to CPI. A 0.25% a year increase in CPI inflation
	expectations before 2030 (with no corresponding change in RPI inflation expectations) would increase the IAS 19 deficit
	by around £0.3bn as at 31 March 2024.
Growth assets	A significant proportion of the BTPS assets are invested in growth assets, such as equities and property. The BTPS has
	temporary hedges in place to partly offset the impact of a fall in equity markets, and adopts a diverse portfolio. A fall in
	these growth assets will increase the IAS 19 and funding deficit.
Life	An increase in the life expectancy of members will result in benefits being paid out for longer, leading to an increase in
expectancy	the IAS 19 liabilities and funding liabilities.
	The BTPS holds two longevity insurance contracts which covers around 32% of the BTPS’s total exposure to	improvements in longevity, providing long-term protection and income to the BTPS in the event that members live
	longer than currently expected.

Other risks include: changes in legislation or regulation which impact the value of the liabilities or assets; and member take-up of options

before and at retirement to reshape their benefits. The scale of the BTPS means that investment changes and any future de-risking

actions need to be planned and executed carefully, potentially over an extended timeframe or multiple transactions.

Scenario analysis

The potential negative impact of these risks is illustrated by the following five scenarios. These have been assessed by BT Group’s

independent actuary as scenarios that might occur no more than once in every 20 years. The scenarios have been updated to reflect

market experience over the last year.

		1-in-20 events
	Scenario	2024	2023
1. Fall in bond yields		1.2%	1.2%
2. Increase in credit spreads		0.9%	0.9%
3. Increase to average inflation expectations over the lifetime of the plan c		1.1%	1.1%
4. Fall in growth assets		15.0%	20.0%
5. Increase to life expectancy		1.2 years	1.3 years

a Scenario assumes a fall in the yields on both government and corporate bonds.

b Scenario assumes an increase in the yield on corporate bonds, with no change to yield on government bonds.

c Scenario assumes average RPI and CPI inflation expectations over the lifetime of the plan increase by the same amount.

d Impact includes the dampening effect of temporary equity hedges held by the BTPS. Scenario considers combinations of changes to the key inputs used to value the growth assets,

leading to a 15% (FY23: 20%) fall in the aggregate value of the growth assets prior to temporary hedges held by the BTPS.

The impact shown under each scenario looks at each event in isolation and reflects the liabilities, assets and investment strategy at

31 March 2024. In practice a combination of events could arise, and the effects are not additive nor are they linear (e.g. doubling the

change in bond yields assumed will not double the impact). The asset allocation is not fixed and changes over the year may impact the

sensitivities shown.

BT Group plc Annual Report 2024

192 Financial statements

Notes to the consolidated financial statements continued

19. Retirement benefit plans continued

Impact of illustrative scenarios which might occur no more than once in every 20 years

The sensitivities have been prepared using the same approach as FY23 which involves calculating the liabilities and assets allowing for the

change in market conditions assumed under the scenario as if they had occurred at the reporting date. The change in impact from FY23 is

due to a combination of: changes in the scenarios, changes in asset and liability values over the year, and changes in the scheme’s

investment strategy in line with the agreed de-risking plan.

BTPS funding

Triennial funding valuation

A funding valuation is carried out for the Trustee by a professionally qualified independent actuary at least every three years. The funding

valuation assesses the on-going financial health of the BTPS. If there are insufficient assets to meet the estimated future benefit payments

to members (i.e. a funding deficit), BT Group and the Trustee agree the amount and timing of additional cash contributions. It is prepared

using the principles set out in UK pension legislation, such as the 2004 and 2021 Pensions Acts, and uses a prudent approach overall when

setting the actuarial assumptions. Some of the key differences compared to the IAS 19 deficit are set out in the table below.

	IAS 19	Funding
Purpose	Balance sheet in BT Group accounts	Assessing the on-going financial health and setting cash payments
Regulation	IFRS	UK pensions legislation
Frequency	Semi-annually	At least every three years
Key assumptions
Determined by	BT Group	BT Group and BTPS agreement
Discount rate	Yield curve based on AA corporate bonds	Yield curve reflecting prudent return expected from BTPS assets
Other assumptions	Best estimate	Prudent overall approach
Assets	BT Group accounts excludes ABF value	Includes ABF value

The different purpose and principles lead to different assumptions being used, and therefore a different estimate for the liabilities and deficit.

The latest funding valuation was performed as at 30 June 2023. The next funding valuation will have an effective date of no later than

30 June 2026.

The results of the two most recent triennial valuations are shown below.

	30 June 2023	30 June 2020
	£bn	£bn
Funding liabilities	(40.9)	(65.3)
Assets	37.2	57.3
BTPS Funding deficit	(3.7)	(8.0)
Percentage of accrued benefits covered by the BTPS assets at valuation date	91 %	88 %
Key assumptions at valuation date:
Discount rate a	5.3 %	1.4 %
Inflation – RPI	3.6 %	3.2 %
Inflation – CPI	3.2 %	2.4 %
Life expectancy – male aged 60 in lower pension bracket	25.5 years	25.8 years
Life expectancy – male aged 60 in higher pension bracket	27.2 years	28.0 years
Life expectancy – female aged 60	28.0 years	28.5 years
Average additional life expectancy for a male member retiring at age 60 in 10 years’ time	0.8 years	0.9 years

a The discount rate has been derived from prudent return expectations that reflect the investment strategy over time, allowing for the BTPS to de-risk to a portfolio consisting

predominantly of bond and bond-like investments by 2034.

BT Group plc Annual Report 2024

193 Financial statements

19. Retirement benefit plans continued

Scenario analysis of the funding position (unaudited)

The impact of changes in market conditions on the funding liabilities differs to the impact on the IAS 19 liabilities due to the size of the

liabilities and how the assumptions are set. For example, the funding liabilities use a discount rate linked to a risk-free rate plus a margin

based on the BTPS’s investment strategy, whereas the IAS 19 liabilities use a discount rate based on corporate bond yields. The chart

below illustrates the approximate impact of the scenarios set on page 192 on the 30 June 2023 funding position.

The figures shown in the table apply to the BTPS assets and funding liabilities as at 30 June 2023; an increase in the assets or funding

liabilities will increase the impact of the scenarios shown.

Deficit payments from the Group

In November 2023, the 2023 triennial funding valuation was finalised, agreed with the Trustee, and certified by the Scheme Actuary. The

funding deficit at 30 June 2023 was £3.7bn, down from £8.0bn at the 2020 funding valuation following £4.4bn of deficit contributions.

Annual contribution amounts remain unchanged, at £600m in each financial year until 31 March 2030, a final payment of £490m before

30 April 2030, and the £180m pa payments due under the ABF arrangement agreed at the 2020 valuation.

No payments are currently payable under the future funding commitment (see page 195).

These payments are summarised in the table below.

Year to 31 March (£m)	2025	2026	2027	2028	2029	2030	2031	2032	2033	2034
Payments from BT plc	600	600	600	600	600 b	600	490	—	—	—
Future funding commitment payments	—	—	—	—	—	—	—	—	—	—
Payments from ABF	180	180	180	180	180	180	180	180	180	180
Total	780	780	780	780	780	780	670	180	180	180

a Payments are due by 30 April each year.

b £10m is directly payable to the BTPS, and BT Group currently intends to pay the balance into the co-investment vehicle.

ABF

Under the ABF, £180m p.a. is paid into the BTPS until June 2033, secured on EE Limited. If the BTPS reaches full funding as calculated by

the Scheme Actuary at any 30 June, the ABF payments to the BTPS will cease. BT Group received tax relief at inception of the ABF based

on the original market value of £1.7bn, and will receive further tax-relief if payments are made to the BTPS in excess of this amount.

Assuming they are all paid, future payments from the ABF have a present value of £1.3bn at 31 March 2024 (FY23: £1.4bn). The fair value

of the ABF is £1.2bn at 31 March 2024 (FY23: £1.3bn) which allows for the probability of the BTPS becoming fully funded, and the

payments to the BTPS ending early.

The fair value of the ABF is included in the assets of the BTPS when assessing the funding deficit. Payments from the ABF to the BTPS are

treated in the same way as coupon payments from bonds, and do not affect the funding deficit when they are paid.

The fair value of the ABF is not included in the assets of the BTPS when assessing the IAS 19 deficit in the group consolidated accounts, as

it is a non-transferable asset issued by the group. Payments from the ABF to the BTPS are treated as deficit contributions, and reduce the

IAS 19 deficit, when they are paid.

Co-investment vehicle

A co-investment vehicle was set up in 2021 which provides BT Group with some protection against the risk of overfunding and therefore

enables BT Group to provide upfront funding with greater confidence. BT Group is eligible for future refunds if some or all of the co-

investment vehicle funds are surplus to the BTPS’s requirements, unless the BTPS, acting prudently but reasonably, decides to defer or

reduce these payments. Assessments will be carried out over a series of dates between June 2032 and June 2041.

Payments made by BT Group into the co-investment vehicle will be invested as if part of the overall BTPS investment strategy. BT Group

will receive tax relief in respect of any funds paid to the BTPS from the vehicle but does not receive tax relief when payments are made to

the co-investment vehicle.

BT Group plc Annual Report 2024

194 Financial statements

Notes to the consolidated financial statements continued

19. Retirement benefit plans continued

The fair value of assets in the co-investment vehicle, £0.1bn at 31 March 2024 (FY23: <£1m), is included in the assets of the BTPS when

assessing both the IAS 19 and funding deficits.

Protections for BTPS (going concern)

BT Group has agreed to provide the Trustee with certain protections to 2035.

Feature	Detail
Future funding	BT Group will provide additional contributions, of between £150m p.a. and £300m p.a., should the funding deficit fall
commitment	behind plan by more than an agreed threshold at any two consecutive reviews. The reviews will be carried out every
	June and December and until the 2026 valuation the threshold is £1bn.
	Payments are due within 12 months of the payments being switched on. Payments will stop once the semi-annual
	assessment shows the funding deficit is back on plan, i.e. outstanding deficit contributions are sufficient to address the
	funding deficit.
	At the 31 December 2023 assessment date, the funding position was within the above limit. The next test will be carried
	out as at 30 June 2024.
Shareholder	BT Group will provide additional payments to the BTPS by the amount that shareholder distributions exceed a
distributions	threshold. For the three years following the 2023 valuation, the threshold allows for 10% per year dividend per share
	growth based on dividends of 7.7p per share in FY23, adjusted to reflect the interim dividend declared at our half-year
	results.
	BT Group has agreed to implement a similar protection at each subsequent valuation, with the terms to be negotiated
	at the time.
	BT Group will consult with the Trustee if:
	–	it considers share buybacks for any purpose other than relating to employee share awards;
	–	it considers making any shareholder distributions in any of the next three years if annual normalised free cash flow of the
	group is below £1bn in the year and distributions within the year would be in excess of 120% of the above threshold; or
	–	it considers making a special dividend.
Material	In the event that BT Group generates net cash proceeds greater than a threshold from disposals (net of acquisitions) in
corporate	any financial year, BT Group will make additional contributions to the BTPS. The threshold is £750m p.a. to 30 June
events	2026.
	The amount payable is one-third of the total net cash proceeds.
	BT Group will consult with the Trustee if:
	–	it considers making acquisitions with a total cost of more than £1.0bn in any 12-month period;
	–	it considers making any disposal of more than £1.0bn;
	–	it considers making a Class 1 transaction which will have a material impact on the BTPS (acquisition or disposal);
	–	it is likely to be subject to a takeover offer; or
	–	there are any other corporate or third-party events which may have a materially detrimental impact on BT Group’s
	covenant to the BTPS (in which case BT Group will use its best endeavours to agree appropriate mitigation).
	This obligation is ongoing until otherwise terminated.
Negative	A negative pledge that future creditors will not be granted superior security to the BTPS in excess of £0.5bn, to cover
pledge	any member of the BT Group. Business as usual financing arrangements are not included within the £0.5bn.

No additional contributions were triggered during FY24.

Protections for BTPS (insolvency)

The Scheme Actuary assumes that in the highly unlikely event that BT Group were to become insolvent, the Trustee would continue to run the

Scheme with a low-risk, closely-matched investment strategy including additional margins for risk. On this basis and assuming no further

contribution from BT Group, it was estimated that at 30 June 2023 the assets of the Scheme would have met around 80% of the liabilities.

Were this to occur, BTPS members would benefit from the following additional protections.

Feature	Detail
Crown Guarantee	The Crown Guarantee was granted by the Government when BT was privatised in 1984; it would only come into
	effect upon the insolvency of BT plc. In July 2014, the courts established that:
	–	the Crown Guarantee covers BT plc’s funding obligation in relation to the benefits of members of the BTPS who
	joined post-privatisation as well as those who joined pre-privatisation (subject to certain exceptions); and
	–	the funding obligation to which the Crown Guarantee relates is measured with reference to BT plc’s obligation
	to pay deficit contributions under the rules of the BTPS.
	The Crown Guarantee is not taken into account for the purposes of the actuarial valuation of the BTPS and is an
	entirely separate matter, only being relevant in the highly unlikely event that BT plc becomes insolvent.
Pension Protection	Further protection is also provided by the PPF which is the fund responsible for paying compensation in respect of
Fund (PPF)	schemes where the employer becomes insolvent.

BT Group plc Annual Report 2024

195 Financial statements

19. Retirement benefit plans continued

EEPS funding valuation

The most recent triennial valuation of the defined benefit section was performed as at 31 December 2021 and agreed in March 2023. This

showed a funding deficit of £218m. The group is scheduled to contribute £1.7m each month until 31 July 2025 and a final payment of up

to £80m by 31 March 2026. £31.7m (FY23: £13.3m) of deficit contributions were paid by the group to the EEPS during the year.

At the triennial valuation date, the EEPS had a diversified investment strategy, investing scheme assets in: global equities (25%), property

& illiquid alternatives (20%), an absolute return portfolio (24%) and a liability-driven investment portfolio (31%).

20. Own shares

Material accounting policies that apply to own shares

Own shares are recorded at cost and deducted from equity. When shares held for the beneficial ownership of employees vest

unconditionally or are cancelled they are transferred from the own shares reserve to retained earnings at their weighted average

cost.

	a			a
	Treasury shares			Employee share ownership trust	Total
	millions	£m	millions	£m	millions	£m
At 1 April 2022	41	(108)	94	(166)	135	(274)
Own shares purchased	—	—	114	(187)	114	(187)
Share options exercised	(5)	14	—	—	(5)	14
Share awards vested	—	—	(14)	25	(14)	25
At 31 March 2023	36	(94)	194	(328)	230	(422)
Own shares purchased	—	—	64	(83)	64	(83)
Share options exercised	(20)	52	(44)	72	(64)	124
Yourshare vestings	—	—	(5)	8	(5)	8
Share awards vested	—	—	(37)	62	(37)	62
At 31 March 2024	16	(42)	172	(269)	188	(311)

a At 31 March 2024, 16,299,007 shares (FY23: 36,190,551) with an aggregate nominal value of £1m (FY23: £2m) were held at cost as treasury shares and 172,157,686 shares (FY23:

193,798,578) with an aggregate nominal value of £9m (FY23: £10m) were held in the Trust.

b See group cash flow statement. The cash paid for the repurchase of ordinary shares was £133m (FY23: £138m). 35m shares (FY23: 40m) were purchased via forward contracts. The

cash received from proceeds on the issue of treasury shares was £57m (FY23: £5m). At 31 March 2024 the group had forward contracts to purchase 15m shares (FY23: 55m shares).

The treasury shares reserve represents BT Group plc shares purchased directly by the group. The BT Group Employee Share Ownership

Trust (the Trust) also purchases BT Group plc shares.

The treasury shares and the shares in the Trust are being used to satisfy our obligations under employee share plans, further details of

which are provided in note 21.

21. Share-based payments

Material accounting policies that apply to share-based payments

We operate a number of equity-settled share-based payment arrangements, under which the group receives services from

employees in consideration for equity instruments (share options and shares) of the group. Equity-settled share-based payments

are measured at fair value at the date of grant. The fair value is recognised as an expense on a straight-line basis over the vesting

period, based on the group’s estimate of the options or shares that will eventually vest. Fair value of share option schemes is

measured using a Binomial options pricing model.

Service conditions are vesting conditions. Any other conditions are non-vesting conditions which are taken into account to

determine the fair value of equity instruments granted. When an award or option does not vest as a result of a failure to meet a non-

vesting condition that is within the control of either counterparty, it is accounted for as a cancellation. Cancellations are treated as

accelerated vesting and all remaining future charges are immediately recognised in the income statement. As the requirement to

save under an employee saveshare arrangement is a non-vesting condition, employee cancellations, other than through a

termination of service, are treated as an accelerated vesting.

No adjustment is made to total equity for awards that lapse or are forfeited after the vesting date.

	2024	2023
Year ended 31 March	£m	£m
Employee saveshare plans	13	21
Yourshare	13	12
Executive share plans:
Deferred Bonus Plan (DBP)	9	12
Retention and Restricted Share Plans (RSP)	36	35
	71	80

BT Group plc Annual Report 2024

196 Financial statements

Notes to the consolidated financial statements continued

19. Retirement benefit plans continued

What share incentive arrangements do we have?

Our plans include savings-related share option plans for employees and those of participating subsidiaries and several share plans for

executives. All share-based payment plans are equity-settled. Details of these plans are set out below.

Employee Saveshare Plans

Under HMRC-approved savings-related share option plans, employees save on a monthly basis, over a three- or five-year period, towards

the purchase of shares at a fixed price determined when the option is granted. This price is set at a 20% discount to the market price for

five-year plans and 10% for three-year plans. The options must be exercised within six months of maturity of the savings contract,

otherwise they lapse. Similar plans operate for our overseas employees. The scheme did not operate in FY24 or FY23.

Yourshare

In FY21 and FY22, all eligible employees of the group were awarded £500 of BT shares. The shares are held in trust for a three-year

vesting period after which they will be transferred to employees, providing they have been continuously employed during that time. A

similar plan operated for overseas employees. Under the terms of Yourshare and the executive share plans, dividends are reinvested in

shares that are added to the relevant share awards, unless the employee has elected to receive dividends in cash.

Deferred Bonus Plan (DBP)

Awards are granted annually to selected senior employees where part of their bonus is awarded in shares in the group. These shares vest

after three years.

Retention and Restricted Share Plans (RSP)

Awards are granted to selected employees. Shares in the group are transferred to participants at the end of a specified retention or

restricted period if they continue to be employed by the group throughout that period.

Incentive Share Plan (ISP)

Under this scheme, certain employees were awarded shares if the group met performance measures linked to total shareholder return,

normalised free cash flow and revenue growth over a three year period. The last ISP was granted in 2019 and vested in 2022.

Employee Saveshare Plans

Movements in Employee Saveshare options are shown below.

	Number of share options			Weighted average exercise price
	2024	2023	2024	2023
Year ended 31 March	millions	millions	pence	pence
Outstanding at 1 April	269	342	102	102
Granted	—	—	—	—
Forfeited	(23)	(42)	118	130
Exercised	(64)	(5)	89	96
Expired	(26)	(26)	151	208
Outstanding at 31 March	156	269	103	102
Exercisable at 31 March	—	—	—	—

The weighted average share price for all options exercised during FY24 was 118p (FY23: 153p).

The following table summarises information relating to options outstanding and exercisable under Employee Saveshare plans at 31 March

2024.

		Weighted	Number of
		average	outstanding	Weighted average
	Exercise price	exercise	options	remaining contractual
Normal dates of vesting and exercise (based on calendar years)	per share	price	millions	life (months)
2024	164p	164p	27	10
2025	82p	82p	129	22
Total		96p	156	20

BT Group plc Annual Report 2024

197 Financial statements

21. Share-based payments continued

Executive share plans

Movements in executive share plan awards are shown below:

		Number of shares (millions)
	ISP	DBP	RSP	Total
At 1 April 2022	31	22	58	111
Awards granted	—	6	29	35
Awards vested	(5)	(5)	(4)	(14)
Awards lapsed	(26)	(1)	(7)	(34)
Dividend shares reinvested	—	2	4	6
At 31 March 2023	—	24	80	104
Awards granted	—	6	42	48
Awards vested	—	(10)	(27)	(37)
Awards lapsed	—	(1)	(8)	(9)
Dividend shares reinvested	—	1	6	7
At 31 March 2024	—	20	93	113

Fair values

There were no grants under Employee Saveshare or the ISP in FY24 or FY23.

Volatility has been determined by reference to BT’s historical volatility which is expected to reflect the BT share price in the future. An

expected life of six months after vesting date is assumed for Employee Saveshare options. The risk-free interest rate is based on the UK

gilt curve in effect at the time of the grant, for the expected life of the option.

The fair values for the DBP and RSP were determined using the market price of the shares at the grant date. The weighted average share

price for DBP awards granted in FY24 was 135p (FY23: 188p) and for RSP awards granted in FY24 was 112p (FY23: 183p).

22. Divestments and assets & liabilities classified as held for sale

Material accounting policies that apply to divestments and assets & liabilities classified

as held for sale

We classify non-current assets or a group of assets and associated liabilities, together forming a disposal group, as ‘held for sale’

when their carrying amount will be recovered principally through disposal rather than continuing use and the sale is highly probable.

Sale is considered to be highly probable when management are committed to a plan to sell the asset or disposal group and the sale

should be expected to qualify for recognition as a completed divestment within one year from the date of classification. We measure

non-current assets or disposal groups classified as held for sale at the lower of their carrying amount and fair value less costs of

disposal. Intangible assets, property, plant and equipment and right-of-use assets classified as held for sale are not depreciated or

amortised.

Upon completion of a divestment, we recognise a profit or loss on disposal calculated as the difference between (i) the aggregate of

the fair value of the consideration received and the fair value of any retained interest less costs incurred in disposing of the asset or

disposal group and (ii) the carrying amount of the asset or disposal group (including goodwill). The profit or loss on disposal is

recognised as a specific item, see note 9.

In the event that non-current assets or disposal groups held for sale form a separate and identifiable major line of business, the

results for both the current and comparative periods are reclassified as ‘discontinued operations’.

Divestments

During the year, we completed the disposals of certain city fibre networks and associated infrastructure assets in Germany and Pelipod

Limited, both of which were classified as held for sale in FY23, and the disposal of BT Enia, a subsidiary of BT Italia. We recognised a net

profit on disposal after tax of £25m through specific items from these divestments, see below for further details.

In FY23, we completed the disposal of BT Sport operations through forming a sports joint venture (Sports JV) with Warner Bros. Discovery

(WBD) recognising a profit on disposal after tax of £28m through specific items. During the current year, we recorded £10m additional net

transaction costs through specific items and received £24m from the deferred cash consideration recorded at completion of the

transaction.

The disposals in the current or prior year have not been reclassified as discontinued operations as they do not meet our definition of a

separate major line of business.

BT Group plc Annual Report 2024

198 Financial statements

Notes to the consolidated financial statements continued

21. Share-based payments continued

The net consideration recognised on completion of these divestments was as follows:

	2024	2023
	£m	£m
Intangible assets, including allocated goodwill of £18m (FY23: £83m)	19	88
Property, plant and equipment	13	13
Right-of-use assets	3	1
Other assets	8	760
Liabilities b	(8)	(357)
Net assets of operations disposed	35	505
Net financial liabilities recognised	—	534
Net impact on the consolidated balance sheet	35	1,039
Profit on disposal, after tax (note 9)	25	28
Net consideration from divestments completed in the year	60	1,067
Additional net transaction costs on the BT Sport disposal (note 9)	(10)	—
Net consideration	50	1,067
Satisfied by Proceeds received in the year per the cash flow statement	81	29
Deferred cash consideration on BT Sport disposal	(24)	70
Deferred cash consideration from other divestments	5	—
Transaction costs	(2)	(35)
Investment in A preference shares in Sports JV (note 24)	—	428
Investment in C preference shares in Sports JV	—	161
Ordinary equity interest in Sports JV (note 24)	—	414
Net consideration from divestments completed in the year	60	1,067
Additional net transaction costs on the BT Sport disposal (note 9)	(10)	—
Net consideration	50	1,067

a Balances in FY23 relate to the BT Sport disposal.

b Other assets in FY23 included £632m of capitalised programme rights and £104m prepayments relating to programme rights payments made for licence periods that had not yet

started. Liabilities included £351m relating to outstanding trade payables to broadcast rights holders for the current licence period.

c Net financial liabilities in FY23 the fair value of BT’s obligation under the minimum revenue commitment of £712m, less tax credit of £178m.

d Deferred cash consideration on the BT Sport disposal relates to the discounted cash flows due to BT from the remaining fixed consideration payable by WBD, of which £24m has

been received in FY24. £52m of deferred consideration is outstanding at 31 March 2024 and held in trade and other receivables, see note 16.

e BT’s C preference shares in the Sports JV are expected to be sold to WBD at the end of BT’s earn-out entitlement in consideration for any programme rights funded by BT and is

therefore akin to deferred consideration for pre-funded programme rights contributed by BT in to the Sports JV at formation. See note 24 for further details.

BT Sport

In August 2022 the group formed a sports joint venture (Sports JV) with Warner Bros. Discovery (WBD) combining BT Sport and WBD’s

Eurosport UK business. As part of the transaction, the group’s wholly owned subsidiary, British Telecommunications plc (BT plc or BT) and

WBD each contributed, sub-licensed or delivered the benefit of their respective sports rights and distribution businesses for the UK &

Ireland to the Sports JV. Both parties each hold a 50% interest and equal voting rights in the Sports JV.

BT Sport’s distribution agreement with Virgin Media transferred to the Sports JV, and the Sports JV also entered into an agreement with

Sky extending beyond 2030 to provide for its distribution of the Sports JV’s combined sports content.

The production and operational assets of BT Sport transferred to WBD who manage and operate the production of the Sports JV’s sport

content.

BT plc entered into a distribution agreement with the Sports JV to procure the sport content required to continue to supply our

broadband, TV and mobile customers. BT plc’s agreement with the Sports JV will extend beyond 2030 and the first four years includes a

minimum revenue guarantee of approximately £500m per annum, after which the agreement will change to a fully variable arrangement.

BT no longer has control of the BT Sport operations based on the assessment of ownership and joint control over the key decisions of the

Sports JV (50/50 with WBD) established through the Sports JV agreement. The group’s retained ordinary equity interest in the combined

business has been classified as a joint venture under IFRS 11, see note 24.

WBD have the option to acquire BT plc’s 50% interest in the Sports JV at specified points during the first four years of the Sports JV (Call

Option). The price payable under the Call Option will be 50% of the fair market value of the Sports JV to be determined at the time of the

exercise, plus any unpaid fixed consideration and remaining earn-out as described below. If the Call Option is not exercised, BT plc will

have the ability to exit its shareholding in the Sports JV either through a sale or IPO after the initial four-year period.

BT Group plc Annual Report 2024

199 Financial statements

22. Divestments and assets & liabilities classified as held for sale continued

Critical & key accounting estimates and significant judgements made in accounting for the

BT Sport disposal in FY23

The following critical and key accounting estimates and significant judgements were made in accounting for the BT Sport disposal in

FY23 only and are not considered to be ongoing significant judgements.

Assessment of whether BT has joint control over the Sports JV

See note 24 for assessment of control.

Valuation of investment in A preference shares (akin to contingent consideration)

BT will receive an earn-out from the Sports JV (subject to liquidity and usual UK company law requirements), which will end at the

earliest of:

– four years post completion of the transaction;

– the exercise by WBD of the Call Option; and

– if the earn-out reaches an agreed cap.

The earn-out cash flows to BT are dependent on the cash profit generation of the Sports JV over the earn-out period and is therefore

akin to contingent consideration, initially recorded at a fair value of £428m reflecting the present value of expected cash flows.

Subsequent to the initial recognition, the group’s carried forward investment in A preference shares are remeasured to fair value at

each reporting date in accordance with IFRS 9, see note 24.

Valuation of the minimum revenue guarantee in BT’s distribution agreement with the Sports JV

BT plc’s obligation under the minimum revenue guarantee of c. £2bn over the first four years of the Sports JV represents both a

trading arrangement on market terms and a financing arrangement for the off-market element of the revenue guarantee, which has

been recorded as a financial liability at an initial fair value of £712m.

The valuation of this financial liability, and what a fair cost-per-subscriber would be, is sensitive to a number of assumptions on

volumes and price, and there is a range of outcomes which we could have arrived at. Alternative scenarios considered, based on the

different prices and terms used with other market participants, could have resulted in a liability ranging from £543m to £837m.

The key assumptions in calculating the financial liability are in estimating what is a market wholesale price at market volume

commitment that is supported by the forecast volumes for the related revenue streams. The volumes used are consistent with those

included in the jointly-agreed business plan for the Sports JV. We note that the bottom of the range disclosed above is based on the

price that we will pay when the minimum revenue guarantee has ended, however we do not believe that is an appropriate rate from

the outset due to existing volume commitments.

The liability is held at amortised cost within trade and other payables on the balance sheet (see note 17) – the carrying amount at

31 March 2024 has reduced to £465m (FY23: £660m) after payments made to the Sports JV on the minimum revenue guarantee.

Valuation of BT’s equity interest in the Sports JV

WBD has the option to acquire BT plc’s 50% interest in the Sports JV at specified points during the first four years of the Sports JV.

If the Call Option is not exercised, BT plc will have the ability to exit its shareholding in the JV either through a sale or IPO.

The group valued its interest in the Sports JV based on the estimated fair value at exit and using the following key assumptions:

– BT expect to realise its interest in the Sports JV through exit rather than ongoing value in use.

– BT expect WBD to exercise its option to acquire BT’s 50% interest in the Sports JV at the end of the first four years of the Sports

JV.

– An earnings multiple has been applied to the expected year 5 EBITDA per the jointly-agreed business plan - the multiple is at the

lower end of a possible range identified from comparable peers and transactions in the premium sports subscription and

broadcasting market.

The investment is subsequently accounted for using the equity method and will be subject to impairment testing at each reporting

period, with any impairment losses recognised through specific items, see note 24.

Discounting of cash flows

All cash flows expected to be received or paid over time were discounted at a rate applicable to the risks associated with the cash flows:

– Deferred payments due to BT from WBD have been discounted at an appropriate post-tax cost of debt;

– BT’s earn-out from the Sports JV has been discounted at the weighted average cost of capital for the Sports JV at completion

date; and

– BT’s commitments under the minimum guarantee have been discounted at the group’s post-tax cost of debt.

We do not consider the net present value of the transaction would be materially affected by a reasonable change in the discount rate.

Assets and liabilities held for sale

At 31 March 2024 there are no assets and liabilities classified as held for sale.

Assets and liabilities classified as held for sale at 31 March 2023 related to certain city fibre networks and associated infrastructure assets

in Germany and Pelipod Limited. These divestments completed during FY24, and information on the gains and losses on disposal is

disclosed above.

BT Group plc Annual Report 2024

200 Financial statements

Notes to the consolidated financial statements continued

22. Divestments and assets & liabilities classified as held for sale continued

The disposal groups held for sale comprised the following assets and liabilities:

	2024	2023
At 31 March	£m	£m
Assets
Intangible assets a	—	13
Property, plant and equipment	—	4
Right-of-use assets	—	3
Inventories	—	—
Trade and other receivables	—	1
Assets held for sale	—	21
Liabilities
Trade and other payables	—	1
Lease liabilities	—	3
Liabilities held for sale	—	4

a Intangible assets in FY23 include goodwill of £13m that has been allocated to the disposal group.

23. Investments

Material accounting policies that apply to investments

Investments classified as amortised cost

These investments are measured at amortised cost. The carrying amount of these balances approximates to fair value. Any gain or

loss on derecognition is recognised in the income statement.

Investments classified as fair value through profit and loss

These investments are initially recognised at fair value plus direct transaction costs. They are re-measured at subsequent reporting

dates to fair value and changes are recognised directly in the income statement.

Equity instruments classified as fair value through other comprehensive income

We have made an irrevocable election to present changes in the fair value of equity investments that are not held for trading in other

comprehensive income. All gains or losses, aside from dividends, are recognised in other comprehensive income and are not

reclassified to the income statement when the investments are disposed of, instead any balance remaining in other comprehensive

income is transferred to retained earnings. Dividends are recognised in the income statement when our right to receive payment

is established. Equity investments are recorded in non-current assets unless they are expected to be sold within one year.

	2024	2023
At 31 March	£m	£m
Non-current assets
Fair value through other comprehensive income	23	23
Fair value through profit or loss	6	6
Total non-current asset investments	29	29
Current assets
Investments held at amortised cost	2,366	3,548
Current asset investments	2,366	3,548

Investments held at amortised cost relate to money market investments denominated in sterling of £2,355m (FY23: £3,094m), in euros of

£5m (FY23: £446m) and US dollars of £6m (FY23: £8m). Within these amounts are investments in liquidity funds of £1,815m (FY23:

£3,491m), collateral paid on swaps of £40m (FY23: £48m), interest on investments of £11m (FY23: £9m) and gilt repurchase agreements

£500m (FY23: £nil) .

BT Group plc Annual Report 2024

201 Financial statements

22. Divestments and assets & liabilities classified as held for sale continued

Fair value estimation

				Total held at
Fair value hierarchy	Level 1	Level 2	Level 3	fair value
At 31 March 2024	£m	£m	£m	£m
Non-current and current investments
Fair value through other comprehensive income	—	—	23	23
Fair value through profit or loss	6	—	—	6
Total	6	—	23	29
At 31 March 2023
Non-current and current investments
Fair value through other comprehensive income	—	—	23	23
Fair value through profit or loss	6	—	—	6
Total	6	—	23	29

The three levels of valuation methodology used are:

Level 1 – uses quoted prices in active markets for identical assets or liabilities.

Level 2 – uses inputs for the asset or liability other than quoted prices that are observable either directly or indirectly.

Level 3 – uses inputs for the asset or liability that are not based on observable market data, such as internal models or other valuation

methods.

Level 3 balances consist of investments classified as fair value through other comprehensive income of £23m (FY23: £23m) which

represent investments in a number of private companies. If specific market data is not available, these investments are held at cost,

adjusted as necessary for impairments, which approximates to fair value.

24. Joint ventures and associates

	2024	2023
At 31 March	£m	£m
Interest in joint ventures	302	354
Interest in associates	5	5
Total	307	359

Share of post tax loss of associates and joint ventures included in the income statement of £21m (FY23: £59m loss) includes £41m loss

(FY23: £60m) relating to our sports joint venture (Sports JV) with Warner Bros. Discovery (WBD) and £20m profit (FY23: £1m) relating to

our other joint ventures and associates including Rugby Radio Station. The Sports JV is the only material equity-accounted investment

held by the group, see below for further details.

Sports JV

In FY23 we formed the Sports JV (known externally as TNT Sports) with WBD, combining BT Sport and WBD’s Eurosport UK business.

Further details on the transaction are provided in note 22.

Key developments in the Sports JV during the year:

– BT Sport’s linear channels and live content were rebranded to TNT Sports prior to the start of the 2023/24 football season with

streaming customers migrated to WBD’s discovery+ platform in October 2023. Eurosport UK rebranding will follow later in the year.

– Underlying trading, before adjustments made to align with the group’s accounting policies (see below), was profitable with stable

subscriber volumes.

– Premier League rights were extended with a four-year deal to air 52 exclusively live matches per season until 2029, and a four-year deal

was agreed with the Football Association to show the FA Cup from 2025.

The group holds both ordinary equity shares and preference shares in the Sports JV entity.

BT Group plc Annual Report 2024

202 Financial statements

Notes to the consolidated financial statements continued

23. Investments continued

Material accounting policies that apply to the Sports JV

Assessment of whether BT has joint control over the Sports JV

The Sports JV is classified as a joint venture based on an assessment under IFRS 10 and 11 of the ownership, voting power and joint

control established through the joint venture agreement between BT and WBD.

Factors relevant to our assessment:

– Equal voting rights over the activities that most significantly impact the returns of the Sports JV, namely decisions around new or

existing sports rights and distribution arrangements.

– Unequal cash distribution during the first four years of the JV due to the earn-out mechanism and larger business contributed into

the JV by BT.

– Revolving credit facility (RCF) provided by BT to fund short-term liquidity required by the Sports JV for working capital and

commitments to sports rights holders.

– WBD’s call option to acquire BT’s 50% interest in the Sports JV is not exercisable before key decisions over material activities of

the Sports JV are made such that joint control still applies.

The assessment whether joint control remains in place is reviewed at each reporting period.

Accounting policies adopted by the Sports JV

The Sports JV has a financial year-end of 31 July and has not yet prepared its first set of audited financial statements. In order to

recognise our share of the Sports JV’s results for our equity-accounted investment, we have prepared the Sports JV’s financial

information disclosed below based on management accounts for the period ending 31 March 2024 after making certain adjustments

to comply with IFRS.

Significant judgements made in preparing the Sports JV’s financial information:

– IFRS 3 acquisition accounting should be applied by the Sports JV over the business combination achieved through the transfer of

the BT Sport and Eurosport UK businesses from BT and WBD respectively, recognising acquired intangibles on the current and

future value of programme rights, and goodwill.

– Revenues from the minimum guarantee in the Sports JV’s distribution agreement with BT should be adjusted to reflect a trading

agreement on market terms with a separate financing arrangement for the off-market portion accounted for under IFRS 9 – this

mirrors the accounting treatment applied by BT (see note 22).

– A and C preference shares issued by the Sports JV to BT should be classified as a financial liability at fair value through profit or loss

under IFRS 9, as cash flows of the liability can be modified by both financial and non-financial factors that are not closely related to

the instrument itself.

– Hedge accounting should be applied on the Sports JV’s forward contracts with BT (see note 30) with fair value movements on the

derivatives recognised in other comprehensive income and held in the cash flow hedge reserve until recycle on settlement of the

forward contracts.

– Programme rights should be recognised on the balance sheet from the point at which the licence period begins and are consumed

by the Sports JV on a straight-line basis over the programming period which is generally 12 months. This is consistent with

accounting policy applied in our previous BT Sport operations that have been transferred to the Sports JV.

Accounting policies in other areas are consistent with those applied by the group.

Key accounting estimates made in accounting for the Sports JV

Valuation of investment in A preference shares

We expect the group’s A preference shares to be redeemed by the Sports JV for the distribution of cash to BT under our earn-out

entitlement. BT’s return on the shares is driven by the underlying cash profit generation of the Sports JV and therefore have been

classified as a fair value through profit or loss (FVTPL) financial asset under IFRS 9 and is remeasured to fair value at each reporting

date.

The fair value recorded is supported by a jointly-agreed business plan and internal valuation model with the following key

assumptions:

– Approximately 45% of revenues and 90% of costs during the remaining earn out period are contractually committed.

– Material contracts are renewed at an economic value no less than current terms.

– Total premium sports subscriber base does not materially grow or decline over the remaining earn-out period.

Ordinary equity shares

Our retained ordinary equity interest in the Sports JV is held under the equity method of accounting, consistent with our accounting policy

on associates and joint ventures.

	2024	2023
	£m	£m
Carrying amount at 1 April	352	414
Share of total comprehensive loss for the year	(52)	(62)
Dividends received during the year	—	—
Carrying amount at 31 March	300	352

BT Group plc Annual Report 2024

203 Financial statements

24. Joint ventures and associates continued

As required by IAS 36, we have assessed the investment for impairment. There is no impairment at 31 March 2024 as the fair value less

costs to sell is higher than the carrying amount of the investment. See below for sensitivities we have applied in determining the fair value

less costs to sell.

The following is summarised and unaudited financial information for the Sports JV prepared in accordance with IFRS and including

adjustments required to align with the group’s accounting policies and fair value adjustments.

	2024	2023
Summarised statement of total comprehensive income for year ended 31 March	£m	£m
Revenue	918	557
Loss for the year	(82)	(121)
Other comprehensive loss	(22)	(2)
Total comprehensive loss	(104)	(123)

	2024	2023
Summarised balance sheet at 31 March	£m	£m
Current assets c	863	1,098
Non-current assets d	1,085	1,286
Current liabilities	(413)	(702)
Non-current liabilities	(575)	(618)
Net assets	960	1,064
Attributable to fair value of BT’s A preference shares (see below)	(387)	(429)
BT’s share of residual net assets (50%)	287	318
Other fair value adjustments	13	34
Carrying amount of interest in Sports JV	300	352

a Includes amortisation of £27m (FY23: £56m) on acquired intangibles; net finance income of £5m (FY23: £6m); and tax income of £57m (FY23: £17m) driven by current tax charge of

£10m (FY23: £4m) offset by deferred tax credit of £67m (FY23: £21m).

b Restated to reflect true-up to opening balance sheet from finalising fair value adjustments.

c Includes cash and cash and cash equivalents of £11m (FY23: £11m).

d Includes goodwill and acquired intangibles of £668m (FY23: £695m restated).

e Includes current financial liabilities (excluding trade and other payables and provisions) of £(244)m (FY23: £(281)m) of which £(163)m (FY23: £(268)m) relates to the outstanding

liability on the RCF provided by BT (see note 30).

f Includes non-current financial liabilities (excluding trade and other payables and provisions) of £(305)m (FY23: £(416)m).

The Sports JV had a loss after tax for the year of £82m, after adjustments made to align with the group’s accounting policies, and reflects

amortisation of acquired intangibles from the BT Sport and Eurosport UK business transfers and adjustments for the off-market minimum

guarantee with BT (see note 22). Underlying trading before these adjustments was profitable. In addition, the Sports JV had other

comprehensive losses of £22m relating to fair value movements on its foreign exchange hedging arrangement with the group (see note

30) that have been designated as cash flow hedges.

Our share of the Sports JV’s results in FY23 included amortisation from provisional fair value adjustments, which were subject to true-up

within 12 months from the Sports JV formation. We have subsequently finalised these fair value adjustments and recorded a £25m credit

in the current year as a true-up to the amount recorded in FY23, of which our 50% share is £13m. The difference is not material and

therefore we have not retrospectively adjusted our share of total comprehensive loss in FY23.

Preference shares

In addition to BT’s ordinary shareholding, BT held the following investments in preference shares in the Sports JV that have not been

included within the equity-accounted interest above.

	2024	2023
At 31 March	£m	£m
Investment in A preference shares	387	429
Investment in C preference shares	146	126
Total	533	555

A net £22m movement has been recorded on the group’s preference share investments relating to fair value changes only, see below for

further details.

– A preference shares – a £42m fair value loss has been recognised through specific items (see note 9), largely driven by a reduction in

forecast cash flows following the Sports JV’s investment in new sports content, leading to lower cash available for distribution under

BT’s earn-out entitlement.

– C preference shares – these shares are expected to be sold to WBD at the end of BT’s earn-out entitlement in consideration for any

sports rights funded by BT at that point. BT’s return on the shares is driven by changes in the Sports JV’s sports rights portfolio which in

turn is dependent on changes in the wider sports rights market and the Sports JV’s financial performance and are therefore held as a

financial asset at FVTPL under IFRS 9. A £20m fair value gain has been recognised through specific items (see note 9) driven by an

expected growth in the Sports JV content portfolio, which will increase the payment to BT for pre-funded sports rights up to the end of

BT’s earn-out entitlement.

The preference shares are held at Level 3 on the fair value hierarchy, reflecting a valuation methodology that does not use inputs based on

observable market data – see note 23 for further details on the fair value hierarchy. See below for sensitivities we have applied in

determining the fair value.

BT Group plc Annual Report 2024

204 Financial statements

Notes to the consolidated financial statements continued

24. Joint ventures and associates continued

Sensitivities

The group’s ordinary equity and preference share investments in the Sports JV, carry both upside and downside risk from changes in micro

and macroeconomic factors affecting the sports content subscription market and risk appetite of investors in that market. Further, a key

decision point in the next 12 months, relating to the renewal of a material customer contract, could significantly impact the value of our

investments.

We have applied the following sensitivities to these risk factors:

– EBITDA decline from loss of revenue or improvement from outperformance against revised forecasts.

– Increase or decrease in the valuation multiple achieved.

– Increase or decrease in the discount rate applied.

		Headroom on impairment test
	Fair value of A and C preference	over equity-accounted
Sensitivity	shares in Sports JV	investment
20% increase or decrease in EBITDA	+/- £112m	+/- £117m
10% increase or decrease in discount rate	+/- £4m	+/- £14m
10% change in valuation multiple	—	+/- £57m

None of these sensitivities generated an impairment on the group’s equity-accounted investment in the Sports JV.

In valuing our investments, we have assumed an exit after the earn-out period ends on the fourth anniversary of forming the Sports JV.

However, an earlier exit would not have a material impact on the amounts recorded.

25. Cash and cash equivalents

Material accounting policies that apply to cash and cash equivalents

Cash and cash equivalents comprise cash in hand and current balances with banks and similar institutions, which are readily

convertible to cash, are subject to insignificant risk of changes in value and have an original maturity of three months or less. All are

held at amortised cost on the balance sheet, equating to fair value.

For the purpose of the consolidated cash flow statement, cash and cash equivalents are as defined above net of outstanding bank

overdrafts. Bank overdrafts are included within the current element of loans and other borrowings (note 26).

	2024	2023
At 31 March	£m	£m
Cash at bank and in hand	332	336
Cash equivalents
Indian rupee deposits	74	55
Other deposits	8	1
Total cash equivalents	82	56
Total cash and cash equivalents	414	392
Bank overdrafts (note 26)	(58)	(11)
Cash and cash equivalents per the cash flow statement	356	381

The majority of cash at bank balance was held at counterparties with a credit rating of A2/A or above. Cash and cash equivalents include

restricted cash of £71m (FY23: £131m), of which £14m (FY23: £23m) was held in countries where local capital or exchange controls

currently prevent us from accessing cash balances. The remaining balance of £57m (FY23: £108m) was held in escrow accounts, or in

commercial arrangements akin to escrow.

BT Group plc Annual Report 2024

205 Financial statements

24. Joint ventures and associates continued

Material accounting policies that apply to loans and other borrowings

We initially recognise loans and other borrowings at the fair value of amounts received net of transaction costs. They are

subsequently measured at amortised cost using the effective interest method and, if included in a fair value hedge relationship, are

re-valued to reflect the fair value movements on the associated hedged risk. The resulting amortisation of fair value movements, on

de-designation of the hedge, is recognised in the income statement.

What’s our capital management policy?

Our capital management policy targets an overall level of debt consistent with our credit rating target of BBB+/Baa1 and minimum rating

of BBB/Baa2 while investing in the business, supporting the pension scheme and meeting our distribution policy. To meet this objective,

we may issue or repay debt, issue or repurchase shares or adjust dividends paid to shareholders. We manage the capital structure and

make adjustments to it accordingly to reflect changes in economic conditions and the risk characteristics of the group. The Board

regularly reviews the capital structure and capital management policy and no changes were made in FY24. For details of share issues and

repurchases in the year see note 20.

Our capital structure consists of net debt and shareholders’ equity. The analysis below summarises the components which we manage as

capital.

	2024	2023
At 31 March	£m	£m
Net debt	19,479	18,859
Total parent shareholders’ equity	12,513	14,490
Capital structure	31,992	33,349

a Excludes non-controlling interests of £5m (FY23: £24m).

Net debt and net financial debt

Net debt consists of loans and other borrowings, lease liabilities (both current and non-current) less current asset investments and cash

and cash equivalents, including items which have been classified as held for sale on the balance sheet. Amounts due to joint ventures and

loans and borrowings recognised in relation to monies received from the sale of cash flows of contract assets and as prepayment for the

forward sale of redundant copper are excluded. Currency-denominated balances within net debt are translated to sterling at swap rates

where hedged. Fair value adjustments and accrued interest applied to reflect the effective interest method are removed. We explain the

rationale for using net debt as a key performance indicator, together with changes to the metric in FY24, in Additional Information on

page 231.

Net financial debt is defined as net debt excluding lease liabilities.

Net debt and net financial debt are considered to be alternative performance measures as they are not defined in IFRS. The most directly

comparable IFRS measure is the aggregate of loans and other borrowings and lease liabilities (current and non-current), current asset

investments and cash and cash equivalents. A reconciliation from these IFRS measures to net debt and net financial debt is given below.

		2024	2023
At 31 March	Notes	£m	£m
Loans and other borrowings		18,526	18,521
Lease liabilities	15	4,955	5,359
Assets and liabilities classified as held for sale	22	—	3
Less:
Cash and cash equivalents	25	(414)	(392)
Current asset investments	23	(2,366)	(3,548)
		20,701	19,943
Adjustments:
To retranslate debt balances at swap rates where hedged by currency swaps		(512)	(819)
To remove accrued interest applied to reflect the effective interest method and fair value
adjustments		(275)	(254)
Loans with joint ventures	30	(11)	(11)
Loans related to the forward sale of redundant copper		(106)	—
Loans related to sale of contract assets		(318)	—
Net debt		19,479	18,859
Lease liabilities	15	(4,955)	(5,359)
Lease liabilities classified as held for sale		—	(3)
Net financial debt		14,524	13,497

a Includes overdrafts of £58m at 31 March 2024 (FY23: £11m).

b Refer to note 22.

c The translation difference between spot rate and hedged rate of loans and borrowings denominated in foreign currency.

BT Group plc Annual Report 2024

206 Financial statements

Notes to the consolidated financial statements continued

26. Loans and other borrowings

The table below shows the key components of net debt and the increase of £620m this year.

	At 31 March	Cash	Net lease	Foreign	Transfer to	Other	At 31 March
			a			d
	2023	flows	additions	exchange	within one year	movements	2024
	£m	£m	£m	£m	£m	£m	£m
Loans and other borrowings due within one year	1,772	(1,615)	—	(12)	1,227	23	1,395
Loans and other borrowings due after one year	16,749	1,800	—	(287)	(1,227)	96	17,131
Total loans and other borrowings	18,521	185	—	(299)	—	119	18,526
Lease liabilities due within one year	800	(882)	—	(1)	849	—	766
Lease liabilities due after one year	4,559	—	487	(8)	(849)	—	4,189
Liabilities classified as held for sale	3	—	—	—	—	(3)	—
Total lease liabilities	5,362	(882)	487	(9)	—	(3)	4,955
Gross debt	23,883	(697)	487	(308)	—	116	23,481
Less:
Impact of cross-currency swaps	(819)	—	—	307	—	—	(512)
Removal of the accrued interest and fair value	(264)	—	—	—	—	(22)	(286)
adjustments
Removal of loans with joint ventures	(11)	(1)	—	—	—	1	(11)
Removal of loans related to the forward sale of redundant copper	—	(105)	—	—	—	(1)	(106)
Removal of loans related to sale of cash flows	—	(305)	—	—	—	(13)	(318)
related to contract assets
Cash and cash equivalents	(392)	(30)	—	8	—	—	(414)
Current asset investments	(3,548)	1,173	—	10	—	(1)	(2,366)
Removal of accrued interest	10	—	—	—	—	1	11
Net debt	18,859	35	487	17	—	81	19,479

	At 31 March	Cash	Net lease	Foreign	Transfer to	Other	At 31
	2022	flows	additions	exchange	within one year	movements	March 2023
	£m	£m	£m	£m	£m	£m	£m
Loans and other borrowings due within one year	873	(136)	—	65	943	27	1,772
Loans and other borrowings due after one year	15,312	1,746	—	525	(943)	109	16,749
Total loans and other borrowings	16,185	1,610	—	590	—	136	18,521
Lease liabilities due within one year	795	(860)	—	2	863	—	800
Lease liabilities due after one year	4,965	—	449	11	(863)	(3)	4,559
Liabilities classified as held for sale	2	—	—	—	—	1	3
Total lease liabilities	5,762	(860)	449	13	—	(2)	5,362
Gross debt	21,947	750	449	603	—	134	23,883
Less:
Impact of cross-currency swaps	(234)	—	—	(585)	—	—	(819)
Removal of the accrued interest and fair value	(251)	—	—	—	—	(13)	(264)
adjustments
Removal of loans with joint ventures	—	(11)	—	—	—	—	(11)
Cash and cash equivalents	(777)	379	—	3	—	3	(392)
Current asset investments	(2,679)	(885)	—	(21)	—	37	(3,548)
Removal of accrued interest	3	—	—	—	—	7	10
Net debt	18,009	233	449	—	—	168	18,859

a Net lease additions are net non-cash movements in lease liabilities during the period, and primarily comprise new and terminated leases, remeasurements of existing leases and lease

interest charges.

b Includes accrued interest and bank overdrafts.

c Translation of debt balances at swap rates where hedged by cross-currency swaps.

d Other movements include removal of accrued interest applied to reflect the effective interest rate method, removal of fair value adjustments and movements relating to held for sale

assets and liabilities (see note 22).

BT Group plc Annual Report 2024

207 Financial statements

26. Loans and other borrowings continued

The table below shows how cash flows from gross debt of £(697)m (FY23: £750m) in the table above reconciles to the line items

presented in the group cash flow statement on page 149:

	2024	2023
At 31 March	£m	£m
Repayment of borrowings	(1,676)	(513)
Proceeds from bank loans and bonds	2,242	2,203
Cash flows from collateral (paid) received	(532)	(17)
Increase (decrease) in amounts owned to joint ventures	(1)	11
Change in bank overdraft	47	(74)
Total loans and other borrowings cash flows - financing activities	80	1,610
Prepayment for the forward sale of copper	105	—
Total loans and other borrowings cash flows - investing activities	105	—
Total loans and other borrowings cash flows	185	1,610
Payment of lease liabilities	(748)	(727)
Interest on lease liabilities paid	(134)	(133)
Total lease liability cash flows - financing activities	(882)	(860)
Total gross debt cash flows	(697)	750

a Presented within cash and cash equivalents in the group cash flow statement.

b In FY24 we received an upfront prepayment of £105m from entering into a forward agreement to sell copper granules created from surplus copper cables. As this is expected to be

the only cash flow that occurs as part of this transaction the cash receipt has been included as a separate line within cash flows from investing activities in the group cash flow

statement. The related liability is recognised on balance sheet within loans and other borrowings, see page 149.

c Presented within interest paid in the group cash flow statement.

BT Group plc Annual Report 2024

208 Financial statements

Notes to the consolidated financial statements continued

26. Loans and other borrowings continued

The table below gives details of the listed bonds and other debt.

	2024	2023
At 31 March	£m	£m
0.875% €306m bond due September 2023 a	—	270
4.5% $675m bond due December 2023	—	554
1% €469m bond due June 2024	—	415
1% €825m bond due November 2024	708	726
3.50% £250m index linked bond due April 2025	575	524
0.5% €650m bond due September 2025	557	571
1.75% €1,300m bond due March 2026	1,112	1,143
1.5% €1,150m bond due June 2027	991	1,017
2.75% €700m bond due August 2027	601	530
2.125% €500m bond due September 2028 a	431	442
5.125% $700m bond due December 2028	561	573
5.75% £600m bond due December 2028	658	669
1.125% €750m bond due September 2029 a	640	657
3.25% $1,000m bond due November 2029	796	812
9.625% $2,670m bond due December 2030 a (minimum 8.625% b )	2,166	2,214
3.75% €800m bond due February 2031	704	704
3.125% £500m bond due November 2031	503	503
3.375% €500m bond due August 2032	433	445
4.25% €850m bond due January 2033	725	—
3.64% £330m bond due June 2033	339	339
1.613% £330m index linked bond due June 2033	394	380
6.375% £500m bond due June 2037	523	523
3.883% £330m bond due June 2039	340	340
1.739% £330m index linked bond due June 2039	394	381
5.75% £450m bond due February 2041	445	347
3.924% £340m bond due June 2042	350	350
1.774% £340m index linked bond due June 2042	406	392
2.08% JPY10,000m bond due February 2043	52	61
3.625% £250m bond due November 2047	251	250
4.25% $500m bond due November 2049	400	408
1.874% €500m hybrid bond due August 2080	432	443
4.250% $500m hybrid bond due November 2081	396	404
4.875% $500m hybrid bond due November 2081	401	409
8.375% £700m hybrid bond due December 2083	710	—
Total listed bonds	17,994	17,796
Loans related to the sale of cash flows related to contract assets	341	100
Loans related to the forward sale of redundant copper	106	—
Other loans	27	614
Bank overdrafts (note 25)	58	11
Total other loans and borrowings	532	725
Total loans and other borrowings	18,526	18,521

a,d

a,f

a,c

a Designated in a cash flow hedge relationship.

b The interest rate payable on this bond attracts an additional 0.25% for rating category downgrade by either Moody’s or Standard & Poor’s to the group’s senior unsecured debt below

A3/A– respectively. In addition, if Moody’s or Standard & Poor’s subsequently increase the ratings then the interest rate will be decreased by 0.25% for each rating category upgrade

by either rating agency. In no event will the interest rate be reduced below the minimum rate reflected in the above table.

c Includes call options between 1.5 years and 7.5 years.

d Redeemed early in March 2024.

e Performance obligations have been substantially delivered to the customer in relation to these cash flows related to contract assets that have been sold but the right to receive cash

is dependent on the group’s future performance in relation to airtime and so a financial liability has been recognised. The related cash flows have been included within financing

activities in the cash flow statement. £318m of the liability relates to sales of cash flows related to contract assets in FY24 and so is removed from our net debt measure, the remaining

£23m relates to sales in FY23.

f Increased the issue size on €700m bond due August 2027 by €100m in November 2023 and on £450m bond due February 2041 by £100m in December 2023 .

Unless previously designated in a fair value hedge relationship, all loans and other borrowings are carried on our balance sheet and in the

table above at amortised cost. The fair value of listed bonds is £17,820m (FY23: £16,979m).

The fair value of our listed bonds is estimated on the basis of quoted market prices (Level 1).

The carrying amount of other loans and bank overdrafts equates to fair value due to the short maturity of these items (Level 3).

The interest rates payable on loans and borrowings disclosed above reflect the coupons on the underlying issued loans and borrowings

and not the interest rates achieved through applying associated cross-currency and interest rate swaps in hedge arrangements.

During the period the group entered into a forward agreement to sell copper granules created from BT’s surplus copper cables. The right

to receive cash is dependent on the initial buyer receiving payment from the end customer and so a financial liability of £106m including

BT Group plc Annual Report 2024

209 Financial statements

26. Loans and other borrowings continued

accrued interest has been recognised. This should be the only cash flow that occurs as part of this transaction and so the cash receipt of

£105m has been included in a separate line within investing activities in the cash flow statement.

Loans and other borrowings are analysed as follows:

	2024	2023
At 31 March	£m	£m
Current liabilities
Listed bonds	996	1,075
Amounts owed to joint ventures	11	11
Other loans and bank overdrafts	388	686
Total current liabilities	1,395	1,772
Non-current liabilities
Listed bonds	16,998	16,722
Other loans and bank overdrafts	133	27
Total non-current liabilities	17,131	16,749
Total loans and other borrowings	18,526	18,521

a Includes collateral received on swaps of £15m (FY23: £557m).

The carrying values disclosed in the above table reflect balances at amortised cost adjusted for accrued interest and fair value

adjustments to the relevant loans or borrowings. These do not reflect the final principal repayments that will arise after taking account of

the relevant derivatives in hedging relationships which are reflected in the table below. All borrowings as at 31 March 2024 were

unsecured.

The principal repayments of loans and borrowings at hedged rates amounted to £17,728m (FY23: £17,442m) and repayments fall due as

follows:

		2024			2023
		Effect of	Principal		Effect of	Principal
	Carrying	hedging and	repayments at	Carrying	hedging and	repayments at
	amount	interest	hedged rates	amount	interest	hedged rates
At 31 March	£m	£m	£m	£m	£m	£m
Within one year, or on demand	1,395	(258)	1,137	1,772	(271)	1,501
Between one and two years	2,727	(85)	2,642	1,165	15	1,180
Between two and three years	431	(24)	407	2,669	(141)	2,528
Between three and four years	1,614	29	1,643	404	(33)	371
Between four and five years	2,282	6	2,288	1,539	(14)	1,525
After five years	10,107	(496)	9,611	10,983	(646)	10,337
Total due for repayment after more than one year	17,161	(570)	16,591	16,760	(819)	15,941
Total repayments	18,556	(828)	17,728	18,532	(1,090)	17,442
Non cash adjustments	(30)			(11)
Total loans and other borrowings	18,526			18,521

a Fair value adjustments and unamortised bond fees.

27. Finance expense and income

	2024	2023
Year ended 31 March	£m	£m
Finance expense
Interest on:
Financial liabilities at amortised cost and associated derivatives	872	753
Lease liabilities	134	133
Derivatives	4	9
Fair value movements on derivatives not in a designated hedge relationship	(1)	1
Reclassification of cash flow hedge from other comprehensive income	38	(21)
Unwinding of discount on provisions and other payables	20	14
Total finance expense before specific items	1,067	889
Specific items (note 9)	121	5
Total finance expense	1,188	894

a Includes £nil (FY23: £13m credit) reclassification of cash flow hedge from other comprehensive income .

BT Group plc Annual Report 2024

210 Financial statements

Notes to the consolidated financial statements continued

26. Loans and other borrowings continued

	2024	2023
Year ended 31 March	£m	£m
Finance income
Interest on:
Bank deposits and cash equivalents	28	16
Investments held at amortised cost	140	40
Other finance income	13	7
Total finance income	181	63

	2024	2023
Year ended 31 March	£m	£m
Net finance expense before specific items	886	826
Specific items (note 9)	121	5
Net finance expense	1,007	831

28. Financial instruments and risk management

We issue or hold financial instruments mainly to finance our operations; to finance corporate transactions such as share buybacks and

acquisitions; for the temporary investment of short-term funds; and to manage currency and interest rate risks. In addition, various

financial instruments, for example trade receivables and payables arise directly from operations.

How do we manage financial risk?

Our activities expose us to a variety of financial risks: market risk (including interest rate risk and foreign exchange risk), credit risk and

liquidity risk.

Treasury operation

We have a centralised treasury operation whose primary role is to manage liquidity and funding requirements as well as our exposure to

associated market risks, and credit risk.

Treasury policy

Treasury policy is set by the Board. Group treasury activities are subject to a set of controls appropriate for the magnitude of borrowing,

investments and group-wide exposures. The Board has delegated authority to operate these policies to a series of panels responsible for

the management of key treasury risks and operations. Appointment to and removal from the key panels requires approval from two of the

following: the Chairman, the Chief Executive or the Chief Financial Officer.

There has been no change in the nature of our risk profile between 31 March 2024 and the date of approval of these financial statements.

How do we manage interest rate risk?

Management policy

Interest rate risk arises primarily from our long-term borrowings. Interest cash flow risk arises from borrowings issued at variable rates,

partially offset by cash held at variable rates. Fair value interest rate risk arises from borrowings issued at fixed rates.

Our policy, as set by the Board, is to ensure that at least 70% of ongoing net debt is at fixed rates. Short-term interest rate management is

delegated to the treasury operation while long-term interest rate management decisions require further approval by the Chief Financial

Officer, the Corporate Finance Director or the Group Treasury Director who each have been delegated such authority from the Board.

Hedging strategy

In order to manage our interest rate profile, we enter into cross-currency and interest rate swap agreements to vary the amounts and

periods for which interest rates on borrowings are fixed. The duration of the swap agreements matches the duration of the debt

instruments. The majority of the group’s long-term borrowings are subject to fixed sterling interest rates after applying the impact of

these hedging instruments.

How do we manage foreign exchange risk?

Management policy

Foreign currency hedging activities protect the group from the risk that changes in exchange rates will adversely affect future net cash flows.

The Board’s policy for foreign exchange risk management defines the types of transactions typically covered, including significant

operational, funding and currency interest exposures, and the period over which cover should extend for each type of transaction.

The Board has delegated short-term foreign exchange management to the treasury operation and long-term foreign exchange management

decisions require further approval from the Chief Financial Officer, the Corporate Finance Director or the Group Treasury Director.

Hedging strategy

A significant proportion of our external revenue and costs arise within the UK and are denominated in sterling. Our non-UK operations

generally trade and are funded in their functional currency which limits their exposure to foreign exchange volatility. We do not have a

material exposure to hyperinflationary economies.

We enter into forward currency contracts to hedge foreign currency capital purchases, purchase and sale commitments, interest expense

and foreign currency investments. The commitments hedged are principally denominated in US dollars, euros, Indian rupees and

BT Group plc Annual Report 2024

211 Financial statements

27. Finance expense and income continued

Hungarian forints. As a result, our exposure to foreign currency arises mainly on non-UK subsidiary investments and on residual currency

trading flows.

We use cross-currency swaps to swap foreign currency borrowings into sterling. The table below reflects the currency and interest rate

profile of our loans and borrowings after the impact of hedging.

		2024			2023
	Fixed rate	Floating rate		Fixed rate	Floating rate
	interest	interest	Total	interest	interest	Total
At 31 March	£m	£m	£m	£m	£m	£m
Sterling	15,899	1,780	17,679	15,210	1,773	16,983
Euro	—	—	—	—	443	443
Other	—	49	49	—	16	16
Total	15,899	1,829	17,728	15,210	2,232	17,442
Ratio of fixed to floating	90%	10%	100%	87%	13%	100%
Weighted average effective fixed
interest rate – sterling	4.6%			4.0%

The floating rate loans and borrowings and committed facilities bear interest rates fixed in advance for periods up to one year, primarily by

reference to RPI, CPI and ARRs where applicable.

Sensitivity analysis

The income statement and shareholders’ equity are exposed to volatility arising from changes in interest rates, foreign exchange rates and

energy prices. To demonstrate this volatility, management has concluded that the following are reasonable benchmarks for performing

sensitivity analysis:

– For interest, a 1% increase in interest rates and parallel shift in yield curves across sterling, US dollar and euro currencies.

– For foreign exchange, a 10% strengthening of sterling against other currencies.

– For energy, a 10% increase in energy prices.

The impact on equity, before tax and excluding any impact related to retirement benefit plans, of a 1% increase in interest rates,

a 10% strengthening of sterling against other currencies, and a 10% increase in energy prices is as detailed below:

	2024	2023
	£m	£m
	Increase	Increase
At 31 March	(reduce)	(reduce)
Sterling interest rates	602	579
US dollar interest rates	(300)	(371)
Euro interest rates	(316)	(284)
Sterling strengthening	(142)	(169)
Energy prices	27	45

A 1% decrease in interest rates, 10% weakening of sterling against other currencies would have broadly the same impact in the opposite

direction.

The impact of a 1% change in interest rates on the group’s annual net finance expense, 10% change in energy prices on group’s income

statement and our exposure to foreign exchange volatility in the income statement, after hedging (excluding translation exposures),

would not have been material in FY24 and FY23.

Credit ratings

We continue to target a BBB+/Baa1 credit rating over the cycle, with a BBB/Baa2 floor. We regularly review the liquidity of the group and

our funding strategy takes account of medium-term requirements. These include the pension deficit and shareholder distributions.

Our December 2030 bond contains terms that require us to pay higher rates of interest when our credit ratings are below A3 in the case of

Moody’s or A– in the case of Standard & Poor’s (S&P). Additional interest of 0.25% per year accrues for each ratings category downgrade

by each agency below those levels effective from the next coupon date following a downgrade. Based on the total notional value of debt

outstanding of £2.1bn at 31 March 2024, our finance expense would increase/decrease by approximately £11m a year if the group’s

credit rating were to be downgraded/upgraded, respectively, by one credit rating category by both agencies.

Our credit ratings were as detailed below:

	2024		2023
At 31 March	Rating	Outlook	Rating	Outlook
Rating agency
Fitch	BBB	Stable	BBB	Stable
Moody’s	Baa2	Stable	Baa2	Stable
Standard & Poor’s	BBB	Stable	BBB	Stable

BT Group plc Annual Report 2024

212 Financial statements

Notes to the consolidated financial statements continued

28. Financial instruments and risk management continued

How do we manage liquidity risk?

Management policy

We maintain liquidity by entering into short and long-term financial instruments to support operational and other funding requirements,

determined by using short- and long-term cash forecasts. These forecasts are supplemented by a financial headroom analysis which is

used to assess funding adequacy for at least a 12-month period. On at least an annual basis the Board reviews and approves the long-

term funding requirements of the group and on an ongoing basis considers any related matters. We manage refinancing risk by limiting

the amount of borrowing that matures within any specified period and having appropriate strategies in place to manage refinancing needs

as they arise. The maturity profile of our loans and borrowings at 31 March 2024 is disclosed in note 26. We have term debt maturities of

£0.7bn in FY25.

Our treasury operation reviews and manages our short-term requirements within the parameters of the policies set by the Board. We hold

cash, cash equivalents and current investments in order to manage short-term liquidity requirements. At 31 March 2024 we had undrawn

committed borrowing facilities of £2.1bn (FY23: £2.1bn) maturing in March 2027.

The following table provides an analysis of the remaining cash flows including interest payable for our non-derivative financial liabilities on

an undiscounted basis, which may therefore differ from both the carrying value and fair value.

				Trade and
		Loans and other	Interest on loans	other	Lease
				c		d
Non-derivative financial liabilities		borrowings	and other borrowings	payables	liabilities	Provisions	Total
At 31 March 2024		£m	£m	£m	£m	£m	£m
Due within one year		1,103	738	5,438	765	—	8,044
Between one and two years		2,727	737	189	730	—	4,383
Between two and three years		431	697	88	696	—	1,912
Between three and four years		1,614	680	—	663	—	2,957
Between four and five years		2,282	649	—	634	—	3,565
After five years		10,107	2,569	—	2,103	—	14,779
		18,264	6,070	5,715	5,591	—	35,640
Interest payments not yet accrued		—	(5,778)	—	—	—	(5,778)
Fair value adjustment		(30)	—	—	—	—	(30)
Impact of discounting	a,b	—	—	(16)	(636)	—	(652)
Carrying value on the balance sheet		18,234	292	5,699	4,955	—	29,180
At 31 March 2023 (restated)
Due within one year		1,512	643	5,467	800	3	8,425
Between one and two years		1,165	637	204	774	2	2,782
Between two and three years		2,669	616	189	676	2	4,152
Between three and four years		404	575	88	640	2	1,709
Between four and five years		1,539	558	—	612	2	2,711
After five years		10,983	2,891	—	2,529	—	16,403
		18,272	5,920	5,948	6,031	11	36,182
Interest payments not yet accrued		—	(5,660)	—	—	—	(5,660)
Fair value adjustment		(11)	—	—	—	—	(11)
Impact of discounting	a,b,c	—	—	(32)	(672)	(1)	(705)
Carrying value on the balance sheet		18,261	260	5,916	5,359	10	29,806

a Foreign currency-related cash flows were translated at closing foreign exchange rates as at the relevant reporting date. Future variable interest cash flows were calculated using the

most recent interest or indexation rates at the relevant balance sheet date.

b The carrying amount of trade and other payables excludes £366m (FY23: £455m) of non-current trade and other payables which relates to non-financial liabilities, and £899m

(FY23: £1,113m) of other taxation, social security and deferred income.

c FY23 comparatives have been restated to include the financial liability for the minimum guarantee provided to the Sports JV due in more than one year, totalling £465m.These

amounts had been omitted from this table within the prior year accounts.

d No provisions meeting the definition of a financial liability have been identified in FY24.

Trade and other payables are held at amortised cost. The carrying amount of these balances approximates to fair value due to the short

maturity of amounts payable.

BT Group plc Annual Report 2024

213 Financial statements

28. Financial instruments and risk management continued

The following table provides an analysis of the contractually agreed cash flows in respect of the group’s derivative financial instruments.

Cash flows are presented on a net or gross basis in accordance with settlement arrangements of the instruments.

		Gross settled	Gross settled
Derivative financial liabilities	Net settled	outflows	inflows	Total
At 31 March 2024	£m	£m	£m	£m
Due within one year	17	2,274	(2,135)	156
Between one and two years	16	1,152	(1,028)	140
Between two and three years	16	519	(430)	105
Between three and four years	17	1,935	(1,857)	95
Between four and five years	17	597	(528)	86
After five years	12	3,071	(2,866)	217
a,b
Total	95	9,548	(8,844)	799
At 31 March 2023
Due within one year	47	2,184	(2,088)	143
Between one and two years	47	1,125	(1,058)	114
Between two and three years	94	939	(882)	151
Between three and four years	111	381	(364)	128
Between four and five years	16	161	(135)	42
After five years	47	2,127	(2,011)	163
Total a,b	362	6,917	(6,538)	741

a Analysed by earliest payment date, certain derivative financial instruments contain break clauses whereby either the group or bank counterparty have the right to terminate the swap

on certain dates. If the break clause was exercised, the mark to market position would be settled in cash.

b Foreign currency-related cash flows were translated at closing foreign exchange rates as at the relevant reporting date. Future variable interest rate cash flows were calculated using

the most recent rate applied at the relevant balance sheet date.

BT Group plc Annual Report 2024

214 Financial statements

Notes to the consolidated financial statements continued

28. Financial instruments and risk management continued

How do we manage energy price risk?

Management policy

UK (excluding Northern Ireland) and European energy prices continue to be exposed to volatility driven by fears of reduced gas supply as

Europe continues the shift from Russian gas to LNG and renewables (which themselves are subject to short-term fluctuations given their

intermittent nature). In order to manage our exposure to fluctuating energy prices, we have a target for UK (excluding Northern Ireland)

energy demand to be at least 80% hedged one quarter before the start of the next financial year, and 50% hedged for the following

financial year. We achieve this through forward over the counter hedges and a mixture of new and existing power purchase agreements

(PPAs) and derivative virtual PPAs (vPPAs).

Hedging strategy

In each financial year our strategy is to build on our existing PPA and vPPA portfolio, exploring opportunities with 5-10 year contracts

delivering favourable net present values. We complement this by monitoring the markets and forward purchasing electricity (power)

when the market is favourable. In the forthcoming financial year the aim is to be 95% hedged, which allows for headroom for increased

outputs from the renewable sources should weather conditions prevail.

How do we manage credit risk?

Management policy

Our exposure to credit risk arises from financial assets transacted by the treasury operation (primarily derivatives, investments, cash and

cash equivalents) and from trading-related receivables.

For treasury-related balances, the Board’s defined policy restricts exposure to any one counterparty by setting credit limits based on the

credit quality as defined by Moody’s and Standard & Poor’s. The minimum credit ratings permitted with counterparties in respect of new

transactions are A3/A– for long-term and P1/A1 for short-term investments. If counterparties in respect of existing transactions fall

below the permitted criteria we will take action where appropriate.

The treasury operation continuously reviews the limits applied to counterparties and will adjust the limit according to the nature and credit

standing of the counterparty, and in response to market conditions, up to the maximum allowable limit set by the Board.

Operational management policy

Our credit policy for trading-related financial assets is applied and managed by each of the customer-facing units (CFUs) to ensure

compliance. The policy requires that the creditworthiness and financial strength of customers are assessed at inception and on an ongoing

basis. Payment terms are set in accordance with industry standards. Where appropriate, we may minimise risks by requesting securities

such as deposits, guarantees and letters of credit. We take proactive steps including constantly reviewing credit ratings of counterparties

to minimise the impact of adverse market conditions on trading-related financial assets.

Exposures

The maximum credit risk exposure of the group’s financial assets at the balance sheet date is as follows:

		2024	2023
At 31 March	Notes	£m	£m
Derivative financial assets		1,070	1,479
Investments	23	2,395	3,577
Trade and other receivables	16	2,224	1,821
Contract assets	5	1,740	1,934
Cash and cash equivalents	25	414	392
Total		7,843	9,203

a The carrying amount excludes £641m (FY23: £503m) of non-current trade and other receivables which relate to non-financial assets, and £1,341m (FY23: £1,239m) of

prepayments, deferred contract costs, finance lease receivables and other assets.

The credit quality and credit concentration of cash equivalents, current asset investments and derivative financial assets are detailed in

the tables below. Where the opinion of Moody’s and Standard & Poor’s (S&P) differ, the lower rating is used.

	2024	2023
Moody’s/S&P credit rating of counterparty	£m	£m
Aa2/AA and above	1,823	3,498
Aa3/AA–	585	115
A1/A+	819	957
A2/A	261	400
A3/A–	—	53
Baa1/BBB+	—	—
Baa2/BBB and below a	30	60
Total b	3,518	5,083

a Baa2/BBB rated exposure represents the energy derivatives and carrying value of forward currency contracts with Sports JV.

b We hold cash collateral of £15m (FY23: £557m) in respect of derivative financial assets with certain counterparties, this has reduced during the year as a result of derivative portfolio

management.

The concentration of credit risk for our trading balances is provided in note 16, which analyses outstanding balances by CFU. Where multiple

transactions are undertaken with a single financial counterparty or group of related counterparties, we enter into netting arrangements to reduce

our exposure to credit risk by making use of standard International Swaps and Derivatives Association (ISDA) documentation. We have also

entered into credit support agreements with certain swap counterparties whereby, on a daily, weekly and monthly basis, the fair value position on

notional £1,047m (FY23: £2,024m) of long-dated cross-currency swaps and interest rate swaps is collateralised .

BT Group plc Annual Report 2024

215 Financial statements

28. Financial instruments and risk management continued

Offsetting of financial instruments

The table below shows our financial assets and liabilities that are subject to offset in the group’s balance sheet and the impact of

enforceable master netting or similar agreements.

			Related amounts not set off in the balance sheet
	Amounts presented in the	Right of set off with derivative	Cash	Net
Financial assets and liabilities	balance sheet	counterparties	collateral	amount
At 31 March 2024	£m	£m	£m	£m
Derivative financial assets	1,070	(356)	(15)	699
Derivative financial liabilities	(539)	356	40	(143)
Total	531	—	25	556
At 31 March 2023
Derivative financial assets	1,479	(323)	(557)	599
Derivative financial liabilities	(383)	323	48	(12)
Total	1,096	—	(509)	587

Derivatives and hedging

We use derivative financial instruments mainly to reduce exposure to foreign exchange and interest rate risks. Derivatives may qualify as

hedges for accounting purposes if they meet the criteria for designation as cash flow hedges or fair value hedges in accordance with IFRS 9.

Material accounting policies that apply to derivatives and hedge accounting

All of our derivative financial instruments are held at fair value on the balance sheet.

Derivatives designated in a cash flow hedge

The group designates certain derivatives in a cash flow hedge relationship. Where derivatives qualify for hedge accounting,

recognition of any resultant gain or loss depends on the nature of the hedge. To qualify for hedge accounting, hedge documentation

must be prepared at inception, the hedge must be in line with BT’s risk management strategy and there must be an economic

relationship based on the currency, amount and timing of the respective cash flows of the hedging instrument and hedged item. This

is assessed at inception and in subsequent periods in which the hedge remains in operation. Hedge accounting is discontinued when

it is no longer in line with BT’s risk management strategy or if it no longer qualifies for hedge accounting.

The group targets a one-to-one hedge ratio. The economic relationship between the hedged item and the hedging instrument is

assessed on an ongoing basis. Ineffectiveness can arise from subsequent change in the forecast transactions as a result of altered

timing, cash flows or value.

When a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a

highly probable transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in

equity. For cash flow hedges of recognised assets or liabilities, the associated cumulative gain or loss is removed from equity and

recognised in the same line of the income statement and in the same period or periods that the hedged transaction affects the

income statement. Any ineffectiveness arising on a cash flow hedge is recognised immediately in the income statement.

Other derivatives

Our policy is not to use derivatives for trading purposes. However, due to the complex nature of hedge accounting, some derivatives

may not qualify for hedge accounting, or may be specifically not designated as a hedge because natural offset is more appropriate.

We effectively operate a process to identify any embedded derivatives within revenue, supply, leasing and financing contracts,

including those relating to inflationary features. These derivatives are classified as fair value through profit and loss and are

recognised at fair value. Any direct transaction costs are recognised immediately in the income statement. Gains and losses on re-

measurement are recognised in the income statement in the line that most appropriately reflects the nature of the item or

transaction to which they relate.

Where the fair value of a derivative contract at initial recognition is not supported by observable market data and differs from the

transaction price, a day one gain or loss will arise which is not recognised in the income statement. Such gains and losses are deferred

and amortised to the income statement based on the remaining contractual term and as observable market data becomes available.

The fair values of outstanding swaps and foreign exchange contracts are estimated using discounted cash flow models and market

rates of interest and foreign exchange at the balance sheet date.

BT Group plc Annual Report 2024

216 Financial statements

Notes to the consolidated financial statements continued

28. Financial instruments and risk management continued

	Current	Non-current	Current	Non-current
	asset	asset	liability	liability
At 31 March 2024	£m	£m	£m	£m
Designated in a cash flow hedge	34	947	80	383
Other	16	73	14	62
Total derivatives	50	1,020	94	445
At 31 March 2023
Designated in a cash flow hedge	78	1,330	62	255
Other	4	67	24	42
Total derivatives	82	1,397	86	297

All derivative financial instruments are categorised at Level 2, with the exception of the energy contracts which are categorised at Level 3

of the fair value hierarchy as defined in note 23.

Instruments designated in a cash flow hedge include interest rate swaps and cross-currency swaps hedging euro, US dollar and Japanese

yen denominated borrowings. Forward currency contracts are taken out to hedge step up interest on currency denominated borrowings

relating to the group’s 2030 US dollar bond. The hedged cash flows will affect the group’s income statement as interest and principal

amounts are repaid over the remaining term of the borrowings (see note 26).

We hedge forecast foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints 12

months forward with certain specific transactions hedged further forward. The related cash flows are recognised in the income statement

over this period.

All hedge relationships were fully effective in the period.

The amounts related to items designated as hedging instruments were as follows:

				Balance in cash		Amount
				flow hedge	Fair value	recycled from
				related	(gain)/loss	cash flow
	Notional			reserves	recognised in	hedge related
Hedged items	principal	Asset	Liability	(gain)/loss	OCI	reserves to P&L
At 31 March 2024	£m	£m	£m	£m	£m	£m
Sterling, euro, US dollar and Japanese yen
denominated borrowings a	13,583	960	(355)	(213)	464	(361)
Step up interest on the 2030 US dollar bond	112	—	(2)	(25)	2	4
Foreign currency purchases, principally
denominated in US dollars, euros, Indian rupees	1,308	18	(11)	(12)	15	8
and Hungarian forints
Other, including energy contracts d		3	(95)	90	161	(7)
Total cash flow hedges	15,003	981	(463)	(160)	642	(356)
Deferred tax		—	—	27
Derivatives not in a designated hedge relationship		89	(76)	—
Carrying value on the balance sheet		1,070	(539)	(133)
At 31 March 2023
Sterling, euro, US dollar and Japanese yen
denominated borrowings a	12,888	1,316	(290)	(316)	(887)	597
Step up interest on the 2030 US dollar bond	115	—	(2)	(31)	(8)	6
Foreign currency purchases, principally
denominated in US dollars, euros, Indian rupees	1,211	34	(24)	(35)	(75)	61
and Hungarian forints
Other, including energy contracts d		58	(1)	(64)	(85)	49
Total cash flow hedges	14,214	1,408	(317)	(446)	(1,055)	713
Deferred tax		—	—	106
Derivatives not in a designated hedge relationship		71	(66)	—
Carrying value on the balance sheet		1,479	(383)	(340)

a Sterling, euro, US dollar and Japanese yen denominated borrowings are hedged using cross-currency swaps and interest rate swaps. Amounts recycled to profit and loss are

presented within finance expense. Range of hedged rates: sterling interest: 5.9%-6.0% (FY23: 5.9%-6.0%), euro FX: 1.12-1.29 (FY23: 1.11-1.29), US dollar FX: 1.28-1.80

(FY23: 1.28-1.80), Japanese yen FX: 156.92 (FY23: 156.92).

b Step up interest on US dollar denominated borrowings are hedged using forward currency contracts. Amounts recycled to profit and loss are presented within finance expense.

Range of hedged FX rates: 1.21-1.28 (FY23: 1.17-1.24).

c Foreign currency purchases, principally denominated in US dollars, euros, Indian rupees and Hungarian forints are hedged using forward currency contracts. Amounts recycled to

profit and loss are presented within cost of sales or operating costs, in line with the underlying hedged item. Range of hedged FX rates: US dollar: 1.21-1.30 (FY23: 1.10-1.31),

euro: 1.12-1.17 (FY23: 1.11-1.18), Indian rupees: 106.05-120.97 (FY23: 106.05-120.97), Hungarian forint: 458.35-467.81 (FY23: 489.17-503.51).

d Includes £(87)m liability (FY23: £57m asset) relating to energy contracts, these are hedged using contracts for difference and virtual power purchase agreements in order to provide

long-term power cost certainty. Amounts recycled to profit and loss are presented within operating costs. Range of strike price: 60-122 £/MWh (FY23: 60-125 £/MWh).

BT Group plc Annual Report 2024

217 Financial statements

28. Financial instruments and risk management continued

				Other comprehensive income
	Capital		b	Cost of
	redemption	Cash flow	Fair value	hedging	Translation
		a		c	d
	reserve	reserve	reserve	reserve	reserve	Total
	£m	£m	£m	£m	£m	£m
At 1 April 2022	27	(148)	(1)	236	505	619
Reclassification e	—	472	—	(472)	—	—
Exchange differences	—	—	—	—	89	89
Net fair value gain (loss) on cash flow hedges	—	864	—	191	—	1,055
Movements in relation to cash flow hedges
g	—	(721)	—	8	—	(713)
recognised in income and expense
Fair value movement on assets at fair value through other comprehensive income	—	—	(3)	—	—	(3)
Tax recognised in other comprehensive income	—	(90)	—	—	—	(90)
At 31 March 2023	27	377	(4)	(37)	594	957
Exchange differences	—	—	—	—	(66)	(66)
Net fair value gain (loss) on cash flow hedges	—	(661)	—	19	—	(642)
Movements in relation to cash flow hedges
g	—	349	—	7	—	356
recognised in income and expense
Tax recognised in other comprehensive income	—	69	—	—	9	78
Transfer to realised profit	—	10	12	—	11	33
At 31 March 2024	27	144	8	(11)	548	716

a The cash flow reserve is used to record the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have

not yet occurred. The transfer to realised profit includes a deferred tax adjustment.

b The fair value reserve is used to record gains or losses on equity investments held at fair value through other comprehensive income. When these investments are disposed of any

remaining gains or losses in other comprehensive income are transferred to retained earnings.

c The cost of hedging reserve reflects the gain or loss on the portion excluded from the designated hedging instrument that relates to the currency basis element of our cross-currency

swaps and forward points on certain foreign exchange contracts. It is initially recognised in other comprehensive income and accounted for similarly to gains or losses in the cash flow

reserve.

d The translation reserve is used to record cumulative translation differences on the net assets of foreign operations. The cumulative translation differences are recycled to the income

statement on disposal of the foreign operation.

e Reclassification on cash flow hedges in FY23 includes £472m reclassification from cash flow hedge reserve to cost of hedging reserve.

f Excludes £nil (FY23: £2m) of exchange differences in relation to retained earnings attributed to non-controlling interests.

g Movements in cash flow hedge-related reserves recognised in income and expense of £356m (FY23: £713m) include a net credit to other comprehensive income of £318m (FY23:

charge of £679m) which have been reclassified to operating costs, and a net credit of £38m (FY23: charge of £34m) which have been reclassified to finance expense (see note 27).

30. Related party transactions

Key management personnel comprise Executive and Non-Executive Directors and members of the Executive Committee. Compensation

of key management personnel is disclosed in note 6.

Amounts paid to the group’s retirement benefit plans are set out in note 19.

Associates and joint ventures related parties include the Sports JV with Warner Bros formed during FY23 (see note 22). Sales of services

to the Sports JV during FY24 were £33m (FY23: £23m), and purchases from the Sports JV were £299m (FY23: £176m) excluding £211m

(FY23: £61m) additional payments made to settle the minimum guarantee liability (see note 17). The amount receivable from the Sports

JV as at 31 March 2024 was £3m (FY23: 10m) and the amount payable to the Sports JV was £94m (FY23: £123m).

As part of the BT Sport transaction, the group has committed to providing the Sports JV with a sterling Revolving Credit Facility (RCF), up

to a maximum for £300m, for short-term liquidity required by the Sports JV to fund its working capital and commitments to sports rights

holders. Amounts drawn down by the Sports JV under the RCF accrue interest at a market reference rate, consistent with the group’s

external short-term borrowings. The outstanding balance under the RCF of £163m (FY23: £268m) is treated as a loan receivable and held

at amortised cost, see note 16. The capacity of the RCF is expected to reduce to £200m during FY25. There is also a loan payable to the

Sports JV of £11m (FY23: £11m), see note 26.

The Sports JV has a foreign exchange hedging arrangement with the group to secure euros required to meet its commitments to certain

sports rights holders; the group has external forward contracts in place to purchase the euros at an agreed sterling rate in order to mitigate

its exposure to exchange risk. The group holds a £29m (FY23: £14m) derivative liability in respect of forward contracts provided to the

Sports JV.

BT Group plc Annual Report 2024

218 Financial statements

Notes to the consolidated financial statements continued

29. Other reserves

Transactions from commercial trading arrangements with associates and joint ventures, including the Sports JV, are shown below:

	2024	2023
At 31 March	£m	£m
Sales of services to associates and joint ventures	37	29
Purchases from associates and joint ventures	338	216
Amounts receivable from associates and joint ventures	5	10
Amounts payable to associates and joint ventures	95	124

Other related party transactions include a dividend received from a joint venture of £12m (FY23: £nil) and in the prior year the purchase of

energy from an entity controlled by the BT Pension Scheme until FY24. FY23 total purchases were £13m and £1m was due to the other

party as at 31 March 2023.

31. Financial commitments

Financial commitments as at 31 March 2024 include capital commitments of £1,049m (FY23: £1,480m) and device purchase

commitments of £171m (FY23: £217m).

TV programme rights commitments were transferred to the Sports JV formed with Warner Bros. Discovery (WBD) during FY23 (see note

22). Both the group and WBD have guaranteed the Sports JV’s obligations under certain programme rights commitments; the fair value

of these parent company guarantees is not material.

Other than as disclosed below and in note 18, there were no contingent liabilities or guarantees at 31 March 2024 other than those arising

in the ordinary course of the group’s business and on these no material losses are anticipated. We have insurance cover to certain limits for

major risks on property and major claims in connection with legal liabilities arising in the course of our operations. Otherwise, the group

generally carries its own risks.

Legal and regulatory proceedings

See note 18 for contingent liabilities associated with legal and regulatory proceedings.

BT Group plc Annual Report 2024

219 Financial statements

30. Related party transactions continued

We have re-presented certain FY23 comparatives to reflect changes to the methodology used to allocate certain shared costs, and the

creation of our Business CFU. See note 1 for more details.

The following disclosures are impacted by the creation of the Business unit only. Re-presentation of prior year comparatives is limited to

the combination of the balances previously reported in respect of the Enterprise and Global units, with no further adjustments:

– Note 5 Revenue: disaggregation of external revenue

– Note 7 Employees: number of employees

– Note 16 Trade and other receivables: trade receivables not past due and accrued income by CFU

Note 4 Segment information is also impacted by changes to the allocation of shared costs and therefore includes additional adjustments.

The tables below present a bridge between previously published financial information and re-presented comparatives for the affected

disclosures (segment revenue and profit; internal revenue and costs; and capital expenditure).

Also presented is a bridge in respect of the CFU normalised free cash flow comparatives which are re-presented in the Additional

information on page 231.

Note 4 Segment information: Segment revenue and profit

		Consumer	Enterprise	Global	Business	Openreach	Other	Total
Year ended 31 March 2023: published		£m	£m	£m	£m	£m	£m	£m
Segment revenue		9,737	4,962	3,328	—	5,675	27	23,729
Internal revenue		(57)	(113)	—	—	(2,890)	—	(3,060)
Adjusted a	revenue from external customers	9,680	4,849	3,328	—	2,785	27	20,669
Adjusted EBITDA		2,623	1,394	458	—	3,449	4	7,928
Depreciation and amortisation		(1,397)	(842)	(317)	—	(2,059)	(138)	(4,753)
Adjusted a	operating profit (loss)	1,226	552	141	—	1,390	(134)	3,175

Year ended 31 March 2023: adjustments for creation of Business and change
in cost allocation methodology
Segment revenue		—	(4,962)	(3,328)	8,258	—	—	(32)
Internal revenue		—	113	—	(81)	—	—	32
Adjusted a	revenue from external customers	—	(4,849)	(3,328)	8,177	—	—	—
Adjusted EBITDA		(154)	(1,394)	(458)	1,945	61	—	—
Depreciation and amortisation		(206)	842	317	(1,047)	94	—	—
Adjusted a	operating profit (loss)	(360)	(552)	(141)	898	155	—	—

Year ended 31 March 2023: re-presented
Segment revenue		9,737	—	—	8,258	5,675	27	23,697
Internal revenue		(57)	—	—	(81)	(2,890)	—	(3,028)
Adjusted a	revenue from external customers	9,680	—	—	8,177	2,785	27	20,669
Adjusted EBITDA		2,469	—	—	1,945	3,510	4	7,928
Depreciation and amortisation		(1,603)	—	—	(1,047)	(1,965)	(138)	(4,753)
Adjusted a	operating profit (loss)	866	—	—	898	1,545	(134)	3,175

BT Group plc Annual Report 2024

220 Financial statements

Notes to the consolidated financial statements continued

32. Re-presentation of prior year comparatives

Note 4 Segment information: Internal revenue and costs

					Internal cost recorded by
	Consumer	Enterprise	Global	Business	Openreach	Other	Total
Year ended 31 March 2023: published	£m	£m	£m	£m	£m	£m	£m
Internal revenue recorded by Consumer	—	40	16	—	—	1	57
Enterprise	26	—	32	—	—	55	113
Global	—	—	—	—	—	—	—
Business	—	—	—	—	—	—	—
Openreach	1,805	888	184	—	—	13	2,890
Total	1,831	928	232	—	—	69	3,060
Year ended 31 March 2023: adjustments for creation of Business and change
in cost allocation methodology
Consumer	—	(40)	(16)	56	—	—	—
Enterprise	(26)	—	(32)	—	—	(55)	(113)
Global	—	—	—	—	—	—	—
Business	26	—	—	—	—	55	81
Openreach	—	(888)	(184)	1,072	—	—	—
Total	—	(928)	(232)	1,128	—	—	(32)
Year ended 31 March 2023: re-presented
Consumer	—	—	—	56	—	1	57
Enterprise	—	—	—	—	—	—	—
Global	—	—	—	—	—	—	—
Business	26	—	—	—	—	55	81
Openreach	1,805	—	—	1,072	—	13	2,890
Total	1,831	—	—	1,128	—	69	3,028

Note 4 Segment information: Capital expenditure

	Consumer	Enterprise	Global	Business	Openreach	Other	Total
Year ended 31 March 2023: published	£m	£m	£m	£m	£m	£m	£m
Intangible assets	530	257	81	—	87	63	1,018
Property, plant and equipment	663	351	171	—	2,709	144	4,038
Capital expenditure	1,193	608	252	—	2,796	207	5,056
Year ended 31 March 2023: adjustments for creation of Business and change
in cost allocation methodology
Intangible assets	22	(257)	(81)	361	14	(59)	—
Property, plant and equipment	6	(351)	(171)	525	37	(46)	—
Capital expenditure	28	(608)	(252)	886	51	(105)	—
Year ended 31 March 2023: re-presented
Intangible assets	552	—	—	361	101	4	1,018
Property, plant and equipment	669	—	—	525	2,746	98	4,038
Capital expenditure	1,221	—	—	886	2,847	102	5,056

Additional information: Normalised free cash flow

		Adjustments for creation of
		Business and change in cost
	Published	allocation methodology	Re-presented
Year ended March 2023	£m	£m	£m
Consumer	1,147	(184)	963
Enterprise	522	(522)	—
Global	63	(63)	—
Business	—	648	648
Openreach	211	8	219
Other	(615)	113	(502)
Normalised free cash flow	1,328	—	1,328

33. Post balance sheet events

On 3 April 2024, BT issued a EUR 750m hybrid bond due on 3 October 2054 under our European Medium Term Note programme with a

coupon of 5.125% until the first call date of 5.5 years.

BT Group plc Annual Report 2024

221 Financial statements

32. Re-presentation of prior year comparatives continued

2024 2023

At 31 March Notes £m £m

Non-current assets

Investment in subsidiary undertaking 2 11,346 11,278

11,346 11,278

Current assets

Cash and cash equivalents 6 8

6 8

Current liabilities

Trade and other payables

53 80

Total assets less current liabilities 11,299 11,206

Non-current liabilities

Loans and other borrowings

400 303

Other payables

— 26

400 329

Equity

Ordinary shares 499 499

Share premium 1,051 1,051

Capital redemption reserve 27 27

Own shares (311) (422)

Profit and loss account

9,633 9,722

Total equity 10,899 10,877

11,299 11,206

a Current trade and other payables consists of loans from group undertakings of £13m (FY23: £15m) and other payables of £40m (FY23: £65m). Other payables mostly comprise the

obligation to purchase own shares into trust via a forward contract.

b Loans and other borrowings consist of a loan from group undertakings of £400m (FY23: £303m). The loan attracts interest of SONIA plus 60 basis points (FY23: SONIA plus 60 basis

points) and is not due within the 12 months after balance sheet date.

c As permitted by Section 408(3) of the Companies Act 2006, no profit and loss account of the company is presented. The profit for the financial year, dealt with in the profit and loss

account of the company was £734m (FY23: loss of £1m).

The financial statements of the company on pages 222 to 225 were approved by the Board of Directors on 15 May 2024 and were signed

on its behalf by:

Adam Crozier Allison Kirkby Simon Lowth

Chairman Chief Executive Chief Financial Officer

BT Group plc Annual Report 2024

222 Financial statements

Financial statements of BT Group plc

BT Group plc company balance sheet

Registered number 4190816

Calledup

capital

premium

account

Capital

redemption

reserve Ownshares

Profit

andloss

account

b,c

Total

£m £m £m £m £m £m

At 1 April 2022 499 1,051 27 (274) 10,430 11,733

Loss for the year — — — — (1) (1)

Dividends paid — — — — (753) (753)

Share-based payments — — — — 3 3

Capital contribution in respect of

share-based payments

— — — — 77 77

Net buyback of own shares — — — (148) (34) (182)

At 31 March 2023 499 1,051 27 (422) 9,722 10,877

Profit for the year — — — — 734 734

Dividends paid — — — — (757) (757)

Share-based payments — — — — 3 3

Capital contribution in respect of

share-based payments

— — — — 68 68

Net buyback of own shares — — — 111 (137) (26)

At 31 March 2024 499 1,051 27 (311) 9,633 10,899

a The allotted, called up and fully paid ordinary share capital of the company at 31 March 2024 was £499m (31 March 2023: £499m), representing 9,968,127,681

(31 March 2023: 9,968,127,681) ordinary shares of 5p each.

b In FY24, 57,073,057 shares (FY23: 18,984,595) were issued from Own shares to satisfy obligations under employee share schemes and executive share awards at a cost of £113m

(FY23: £38m). At 31 March 2024, 16,299,007 shares (FY23: 36,190,551) with an aggregate nominal value of £1m (FY23: £2m) were held at cost as treasury shares and 172,157,686

shares (FY23: 193,798,578) with an aggregate nominal value of £9m (FY23: £10m) were held in the Trust.

c As permitted by Section 408(3) of the Companies Act 2006, no profit and loss account of the company is presented. The profit for the financial year, dealt with in the profit and loss

account of the company, was £734m (FY23: loss of £1m).

BT Group plc Annual Report 2024

223 Financial statements

BT Group plc company statement of changes in equity

Principal activity

The principal activity of the company is to act as the ultimate

holding company of the BT Group.

Accounting basis

As used in these financial statements and associated notes, the

term ‘company’ refers to BT Group plc (a public company limited

by shares). These separate financial statements are prepared in

accordance with Financial Reporting Standard 101 Reduced

Disclosure Framework (FRS 101). In preparing these financial

statements, the Company applies the recognition, measurement

and disclosure requirements of UK-adopted international

accounting standards, but makes amendments where necessary in

order to comply with Companies Act 2006 and has set out below

where advantage of the FRS 101 disclosure exemptions has been

taken.

Financial statements

The financial statements are prepared on a going concern basis

and under the historical cost convention. Refer to page 150 for

further details of this assessment.

As permitted by Section 408(3) of the Companies Act 2006, the

company’s profit and loss account has not been presented.

New and amended accounting standards effective during

the year

The following amended standards were effective during the year,

none of which had a material impact on the financial statements of

the company.

IFRS 17 Insurance Contracts

BT adopted IFRS 17 with retrospective application on 1 April 2023.

We have assessed the impact of the standard on the company, and

concluded that its impact is not material. Contracts in scope of the

standard are restricted to parent company guarantees, which we

have assessed to have no material impact.

Disclosure of Accounting policies (Amendments to IAS 1 and

IFRS Practice Statement 2)

These amendments require the disclosure of ‘material’ rather than

‘significant’ accounting policies. The amendments have not

resulted in any changes to accounting policies disclosures made in

these financial statements.

Definition of Accounting Estimate (Amendments to IAS 8)

The amendments introduce a new definition for accounting

estimates.The amendments have not resulted in any changes to

accounting policies disclosures made in these financial statements.

Deferred Tax related to Assets and Liabilities arising from a

Single Transaction (Amendments to IAS 12)

The amendments narrow the scope of the initial recognition

exemption to exclude transactions that give rise to equal and

offsetting temporary differences.The amendments have not

resulted in any changes to accounting policies disclosures made in

these financial statements.

Exemptions

As permitted by FRS 101, the company has taken advantage of the

disclosure exemptions available under that standard in relation to

business combinations, share-based payments, non-current assets

held for sale, financial instruments, capital management, and

presentation of comparative information in respect of certain

assets, presentation of a cash flow statement, standards not yet

effective, impairment of assets and related party transactions. The

company intends to continue to take advantage of these

exemptions in future years. Further detail is provided below.

Where required, equivalent disclosures have been given in the

consolidated financial statements of BT Group plc.

The BT Group plc consolidated financial statements for the year

ended 31 March 2024 contain a consolidated cash flow statement.

Consequently, as permitted by IAS 7 ‘Statement of Cash flow’, the

company has not presented its own cash flow statement.

The BT Group plc consolidated financial statements for the year

ended 31 March 2024 contain related party disclosures.

Consequently, the company has taken advantage of the

exemption in IAS 24 ‘Related Party Disclosures’ not to disclose

transactions with other members of the BT Group.

The BT Group plc consolidated financial statements for the year

ended 31 March 2024 contain financial instrument disclosures

which comply with IFRS 7 ‘Financial Instruments: Disclosures’.

Consequently, the company is exempt from the disclosure

requirements of IFRS 7 in respect of its financial instruments.

Investment in subsidiary undertaking

Investment in subsidiary undertaking is stated at cost and reviewed

for impairment if there are indicators that the carrying value may

not be recoverable. An impairment loss is recognised to the extent

that the carrying amount cannot be recovered either by selling the

asset or by continuing to hold the asset and benefiting from the net

present value of the future cash flows (value in use) of the

investment.

Investment impairment is assessed at each reporting date.

Estimating value in use and key assumptions used (discount rate

and growth rate) in performing the impairment assessment are in

line with how we assess the group’s goodwill in note 13 to the

consolidated group financial statements. There is significant

headroom between the carrying value of the investment and the

calculated value in use. See Note 2 for further details.

Taxation

Full provision is made for deferred taxation on all temporary

differences which have arisen but not reversed at the balance

sheet date. Deferred tax assets are recognised to the extent that it

is regarded as more likely than not that there will be sufficient

taxable profits from which the underlying timing differences can be

deducted. The deferred tax balances are not discounted.

Dividends

Dividend distributions are recognised as a liability in the year in

which the dividends are approved by the company’s shareholders

for final dividends. Interim dividends are recognised when they are

paid. Dividend income is recognised on receipt.

Share capital

Ordinary shares are classified as equity. Repurchased shares of the

company are recorded in the balance sheet as part of Own shares

and presented as a deduction from shareholders’ equity at cost.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and current

balances with banks and similar institutions, which are readily

convertible to cash and are subject to insignificant risk of changes

in value and have an original maturity of three months or less.

Share-based payments

The issuance by the company of share options and awards to

employees of its subsidiaries represents additional capital

contributions to its subsidiaries. An addition to the company’s

investment in subsidiaries is recorded with a corresponding

increase in equity shareholders’ funds. The additional capital

contribution is determined based on the fair value of options and

awards at the date of grant and is recognised over the vesting

period.

BT Group plc Annual Report 2024

224 Financial statements

Notes to the company financial statements

1. BT Group plc accounting policies

Total

Cost £m

At 1 April 2022 11,201

Additions 77

At 31 March 2023 11,278

Additions 68

At 31 March 2024 11,346

The company held a 100% investment in BT Group Investments

Limited, a company registered in England and Wales, throughout

FY24 and FY23. Additions of £68m (FY23: £77m) comprise capital

contributions in respect of share-based payments.

Investment impairment is assessed at each reporting date to

evaluate if there are indicators that the carrying value may not be

recoverable. As market capitalisation was less than the cost of

investment at points during the year we have performed an

impairment review. This was performed in line with the Group

goodwill impairment review as detailed in Note 13 of the

consolidated accounts.

Our FY24 assessment concluded that there remains significant

headroom between the carrying value of the investment and the

calculated value in use of the investment. We have exercised a

number of assumptions in determining the future cash flows,

discount rate and growth rate to arrive at this conclusion.

Value in use is estimated by discounting future cash flows. Future

cash flows are calculated on a nominal basis and based on risk-

adjusted projections derived from the latest Board-approved five-

year financial plans, representing management's best risk-

adjusted estimate of future growth. This includes the direct and

indirect impacts of inflation and associated mitigations. Plans

reflect management’s expectations of revenue, EBITDA growth,

capital expenditure, working capital and operating cash flows,

based on past experience and future expectations of business

performance, and form the basis of outlook issued by the group.

The pre-tax discount rate used in performing the value in use

calculation was 9.25%. The pre-tax discount rates applied to the

cash flow forecasts are derived from our post-tax weighted

average cost of capital. The assumptions used in the calculation of

the group’s weighted average cost of capital are benchmarked to

externally available data.

In FY24 we have used perpetuity growth rates averaging 0.8% as

determined based on the long-term growth prospects of each

market. The growth rates have been benchmarked against

external data for the relevant markets and analysts’ expectations.

None of the growth rates applied exceed the expected average

long-term growth rates for those markets or sectors.

We consider there to be no reasonably possible scenario in which

an impairment could occur within the next 12 months from the

reporting date.

3. Other information

Dividends

An interim dividend of 2.31p per share amounting to £227m was

paid on 2 February 2024 (FY23: interim dividend of 2.31p per

share amounting to £226m paid). A final dividend of 5.69p per

share amounting to approximately £553m is proposed in respect

of the year ended 31 March 2024 (FY23: final dividend of 5.39p

per share amounting to £530m paid in respect of the year ended

31 March 2023).

Employees and directors

The Chairman and the Executive and Non-Executive Directors of

BT Group plc were the only employees and directors of the

company during FY24 and FY23. The costs relating to qualifying

services provided to the company’s principal subsidiary, British

Telecommunications plc, are recharged to that company.

BT Group plc Annual Report 2024

225 Financial statements

2. Investment in subsidiary undertaking

Held directly

United Kingdom

1 Braham Street, London, E1 8EE,

UnitedKingdom

BT Group Investments

Limited 100% ordinary

BT Group Nominees

Limited 100% ordinary

Held via other group companies

Algeria

20 Micro zone d’Activités Dar El Madina, Bloc B,

Loc N01 Hydra, Alger, 16000, Algeria

BT Algeria

Communications SARL 100% ordinary

Argentina

Maipu No 1210, piso 8 (C1006), Buenos Aires,

Argentina

BT Argentina S.R.L. 100% ordinary

Australia

Level 20, 420 George Street, Sydney, NSW

2000, Australia

BT Australasia Pty

Limited 100% ordinary

100% preference

Austria

Louis-Häfliger-Gasse 10, 1210, Wien, Austria

BT Austria GmbH 100% ordinary

Azerbaijan

AZ 1025 The Azure Business Center, 20th Floor, c/

o BDO Azerbaijan LLC, Z1025, Khatai district,

Afiyaddin Jalilov 26, apt.177, Azerbaijan

BT Azerbaijan Limited,

Limited Liability

Company 100% ordinary

Bahrain

Suite #2216, Building No. 2504, Road 2832, Al

Seef, P.O. BOX 18259, Bahrain

BT Solutions Limited

(Bahrain Branch)

100% –

Bangladesh

UTC Building, 19th Floor, Kawran Bazar, Dhaka,

1215, Bangladesh

BT Communications

Bangladesh Limited 100% ordinary

Barbados

3rd Floor, The Goddard Building, Haggatt Hall,

St. Michael, BB11059, Barbados

BT (Barbados) Limited 100% ordinary

Belarus

58 Voronyanskogo St, Office 89, Minsk 220007,

Belarus

BT BELRUS Foreign

Limited Liability

Company 100% ordinary

Belgium

Telecomlaan 9, 1831 Diegem, Belgium

BT Global Services

Belgium BV 100% ordinary

Global Security Europe

Limited – Belgian

Branch

100% –

Rue de L’Aêropostale 8, 4460 Grâce-Hollogne,

Belgium

IP Trade SA 100% ordinary

Company name

Group

interest in

allotted

capital

class

Bermuda

Century House, 16 Par-la-Ville Road, Hamilton,

HM08, Bermuda

Communications

Global Network

Services Limited 100% ordinary

Bolivia

Avda. 6 de Agosto N° 2700, Torre Empresarial

CADECO, Piso 4, La Paz, Bolivia

BT Solutions Limited

Sucursal Bolivia

100% –

Bosnia and Herzegovina

Trg Heroja 10/1, Sarajevo, 71000, Bosnia and

Herzegovina

BTIH Teleconsult

Drustvo sa

organicenom

odgovornoscu za

posredovanje i

zastupanje d.o.o.

Sarajevo 100% –

Botswana

Plot 2482b, Tshekedi Crescent, Extension 9,

Gaborone, 211008, Bontleng, Botswana

BT Global Services

Botswana

(Proprietary) Limited 100% ordinary

Brazil

Avenida Dr. Ruth Cardoso, 4777 – 14 andar,

Pinheiros, São Paulo, SP, 05477-000, Brazil

BT Communications

do Brasil Limitada 100% quotas

BT Global

Communications do

Brasil Limitada 100% quotas

Bulgaria

51B Bulgaria Blvd., fl. 4, Sofia, 1404, Bulgaria

BT Bulgaria EOOD 100% ordinary

BT Global Europe B.V.

– Bulgaria branch

100 % –

Canada

100 King Steet West, Suite 6200, 1 Canadian

Place, Toronto ON M5X 1B8, Canada

BT Canada Inc. 100% common

Chile

Rosario Norte 407, Piso 6, Las Condes,

Santiago, Chile

Servicios de

Telecomunicaciones

BT Global Networks

Chile Limitada 100% ordinary

China

Building 16, 6th Floor, Room 602-B, No. 269 Wuyi

Road, Hi-tech Park, Dalian, 116023, China

BT Technology (Dalian)

Company Limited 100% registered

No. 3 Dong San Huan Bei Lu, Chao Yang District,

Beijing, 100027, China

BT Limited, Beijing

Office

100% –

Room 2101-2103, 21/F, International Capital

Plaza, No. 1318 North Sichuan Road, Hong Kou

District, Shanghai, 200080, China

BT China Limited-

Shanghai Branch

Office

100% –

Company name

Group

interest in

allotted

capital

class

1502-1503, AVIC Center, No. 1008, Huafu Road,

Futian District, Shenzhen, 518000, China

BT China Limited –

Shenzhen Branch

100% –

Room 3, 4, F7, Tower W3, Oriental Plaza, 1 East

Chang An Avenue, Dongcheng District, Beijing,

100738, China

BT China Limited 100% registered

Unit 1537B, Floor 15th, No. 55, Xili Road,

Shanghai Free Trade Zone, Shanghai, China

BT China

Communications

Limited 50% ordinary

Colombia

Calle 113, 7-21,Torre A Oficina 1015 Teleport

Business, Bogota, Colombia

BT Colombia Limitada 100% quotas

Costa Rica

Heredia-Belen La Ribera, Centro Corporativo El

Cafeta, Edificio B, segundo piso, Oficinas de

Deloitte, San José, Costa Rica

BT Global Costa Rica

SRL 100% ordinary

Côte d’Ivoire

Abidjan Plateau, Rue du commerce, Immeuble

Nabil 1er étage, 01 BP 12721 Abidjan 01, Côte

d’Ivoire

BT Cote D’Ivoire 100% ordinary

Cyprus

Hadjianastassiou, Ioannides LLC, DELOITTE

LEGAL, Maximos Plaza, Tower 3, 2nd Floor, 213

Arch. Makariou III Avenue, Limassol, 3030,

Cyprus

BT Solutions Limited

100% –

Arch. Makarios III, 213, Maximos Plaza, Tower 3,

Floor 2, Limassol, 3030, Cyprus

BT Global Europe B.V

100% –

Czech Republic

Pujmanové 1753 / 10a, Nusle, 140 00, Prague 4,

Czech Republic

BT Global Europe B.V.,

odštěpný závod

100% –

Denmark

Norre Farimagsgade 13, 4. th, 1364 Kobenhavn

K, Denmark

BT Denmark ApS 100% ordinary

Dominican Republic

Av. Abraham Lincoln Esq. Jose Amado Soler, Edif.

Progresso, Local 3-A, Sector Ens. Serralles, Santo

Domingo, Dominican Republic

BT Dominican

Republic, S. A. 100% ordinary

Ecuador

Av. Amazonas N21-252 y Carrión, Edificio

Londres, 4° Piso, Quito, Ecuador

BT Solutions Limited

(Sucursal Ecuador)

100% –

Egypt

Unit no. 306 Administrative Second Floor,

AlSaraya Mall, Al Mehwar Al- Markazy,

Giza,Egypt

BT Telecom Egypt LLC 100% stakes

Company name

Group

interest in

allotted

capital

class

BT Group plc Annual Report 2024

226 Financial statements

Related undertakings

El Salvador

Edificio Avante Penthouse Oficina, 10-01 Y

10-03 Urbanizacion, Madre Selva, Antiguo

Cuscatlan, La Libertad, El Salvador

BT El Salvador,

Limitada de Capital

Variable 100% ordinary

Finland

Mannerheimvägen 12 B 6, 00100 Helsinki,

Finland

BT Nordics Finland Oy 100% ordinary

France

Tour Ariane, 5 place de la Pyramide, La Defense

Cedex, 92088, Paris, France

BT France S.A.S. 100% ordinary

Germany

Barthstraße 4, 80339, Munich, Germany

BT (Germany) GmbH

& Co. oHG 100% ordinary

BT Deutschland GmbH 100% ordinary

BT Garrick GmbH 100% ordinary

Widdersdorfer Strasse 252, 50933, Cologne,

Germany

Global Security Europe

Limited – Germany

Branch

100% –

Ghana

5th Floor, Vivo Place, Cantonments City,

Rangoon Lane, P.O. Box MB 595, Accra, Ghana

BT Ghana Ltd 100% ordinary

Greece

75 Patision Street, Athens, 10434, Greece

BT Solutions Limited-

Greek Branch

100% –

Guatemala

5ta avenida 5-55 zona 14, Edificio Europlaza

World Business Center, Torre IV, nivel 7, oficina

702, Guatemala City, Guatemala

BT Guatemala S.A. 100% unique

Honduras

Colonia Florencia Norte, Edificio Plaza America,

5to Piso, Tegucigalpa, Honduras

BT Sociedad De

Responsabilidad

Limitada 100% –

Hong Kong

Unit 31-105, 31/F, Hysan Place, 500 Hennessy

Road, Causeway Bay, Hong Kong

BT Hong Kong Limited 100% ordinary

Infonet China Limited 100% ordinary

Hungary

1112 Budapest, Boldizsár utca 4. , Hungary

BT Global Europe B.V.

Magyarorszagi

Fioktelepe

100% –

BT Limited

Magyarorszagi

Fioktelepe

100% –

BT ROC Kft 100% business

Company name

Group

interest in

allotted

capital

class

India

11th Floor, Eros Corporate Tower, Opp.

International Trade Tower, Nehru Place, New

Delhi, 110019, India

BT (India) Private

Limited 100% ordinary

BT e-Serv (India)

Private Limited 100% equity

BT Global Business

Services Private

Limited 100% ordinary

BT Global

Communications India

Private Limited 100% ordinary

BT Telecom India

Private Limited 100% ordinary

A-47, Hauz Khas, New Delhi, Delhi-DL, 110016,

India

Orange Services India

Private Limited 100% ordinary

Indonesia

Menara Astra, 37F. JI. Jendral Sudirman Kav

5-6, Jakarta Pusat, Jakarta, 10220, Indonesia

PT BT Indonesia 100% ordinary

PT BT

Communications

Indonesia 95% ordinary

Isle of Man

Third Floor, St Georges Court, Upper Church

Street, Douglas, IM1 1EE, Isle of Man

Belmullet Limited 100% ordinary

Communicator

Insurance Company

Limited 100% ordinary

Priestgate Limited 100% ordinary

Israel

Beit Oz, 14 Abba Hillel Silver Rd, Ramat Gan,

52506, Israel

B.T. Communication

Israel Ltd 100% ordinary

Italy

Via Mario Bianchini 15, 00142, Roma, Italy

BT Global Services

Limited

100% –

Via Tucidide 14, 20134, Milano, Italy

Atlanet SpA 99% ordinary

Basictel SpA 99% ordinary

BT Italia S.p.A. 99% ordinary

Jamaica

Suite #6, 9A Garelli Avenue , Half way tree, St.

Andrew, Kingston 10, Jamaica

BT Jamaica Limited 100% ordinary

Japan

ARK Mori Building, 12-32 Akasaka, 1-Chome,

Minato-Ku, Tokyo, 107 – 6024, Japan

BT Japan Corporation 100% ordinary

Jersey

26 New Street, St Helier, JE2 3RA, Jersey

Ilford Trustees (Jersey)

Limited 100% ordinary

PO Box 264, Forum 4, Grenville Street, St Helier,

JE4 8TQ, Jersey

BT Jersey Limited 100% ordinary

Company name

Group

interest in

allotted

capital

class

Jordan

Wadi AlSer – Dahiet Prince Rashid – King

Abdullah Street , Building No. 391 – 3rd Floor,

Jordan

BT (International)

Holdings Limited

(Jordan) 100% ordinary

Kazakhstan

n.p.38b, Building 5, Kaiym Mukhamedkhanov

Street, Nura District, Astana, Index 010000,

Kazakhstan

BT Kazakhstan LLP 100% –

Kenya

L R No, 1870/ 1/176, Aln House, Eldama Ravine

close, off Eldama Ravine Road, Westlands, P O

Box 764, Sarit Centre, Nairobi, 00606, Kenya

BT Communications

Kenya Limited 70% ordinary

Korea

Level 19, Hana Securities Building, 81, Uisadang-

daero, Yeongdeungpogu, Seoul, 07321, Republic

of Korea

BT Global Services

Korea Limited 100% common

Latvia

Muitas iela 1A, Riga, LV-1010, Latvia

BT Latvia Limited,

Sabiedriba ar

ierobezotu atbildibu 100% ordinary

Lebanon

Abou Hamad, Merheb, Nohra & Chedid Law

Firm, Chbaro Street, 22nd Achrafieh Warde

Building, 1st Floor, Beirut, P.O.BOX 165126,

Lebanon

BT Lebanon S.A.L. 100% ordinary

Lithuania

Aludariu str 2-33, LT-01113 Vilnius, Lithuania

UAB BTH Vilnius 100% ordinary

Luxembourg

12 rue Eugene Ruppert, L 2453, Luxembourg

BT Global Services

Luxembourg SARL 100% ordinary

BT Broadband

Luxembourg Sàrl 100% ordinary

Malawi

KEZA Office Park Blocks 3, First Floor, Near

Chichiri, Shopping Mall, Blantyre, Malawi

BT Malawi Limited 100% ordinary

Malaysia

Level 5, Tower 3, Avenue 7, Bangsar South,

No.8, Jalan Kerinchi, 59200 Kuala Lumpur,

Malaysia

BT Global Technology

(M) Sdn. Bhd. 100% ordinary

BT Systems (Malaysia)

Sdn Bhd 100% ordinary

Malta

Level 1, LM Complex, Brewery Street, Zone 3,

Central Business District, Birkirkara CBD, 3040,

Malta

BT Solutions Limited

100% –

Company name

Group

interest in

allotted

capital

class

BT Group plc Annual Report 2024

227 Financial statements

Mauritius

c/o Deloitte, 7th Floor Standard Chartered

Tower, 19-21 Bank Street, Cybercity, Ebène,

72201, Mauritius

BT Global

Communications

(Mauritius) Limited 100% ordinary

Mexico

Boulevard Manuel Avila Camacho No. 32, 6th

Floor, Lomas de Chapultepec III Section, Miguel

Hidalgo, Mexico City CP11000

BT LatAm México, S.A.

de C.V. 100% common

Montenegro

Vasa Raickovica 4b, Podgorica, Podgorica,

Montenegro

BT Montenegro DOO 100% –

Morocco

Bd. Abdelmoumen, Immeuble Atrium, n 374,

Lot. Manazyl Al Maymoune, 5eme etage,

Casablanca, 20390, Morocco

BT Solutions Limited –

Morocco Branch

100% –

Mozambique

Avenida Kenneth Kaunda, number 660,

Sommershield, Maputo City, Mozambique

BT Mozambique,

Limitada 100% quotas

Namibia

Unit 3, 2nd floor, Ausspann Plaza, Dr Agostinho

Neto Road, Ausspannplatz, Private Bag,

Windhoek, 12012, Namibia

BT Solutions Limited

100% –

Netherlands

Herikerbergweg 2, 1101 CM, Amsterdam,

Netherlands

BT Global Europe B.V. 100% ordinary

BT (Netherlands)

Holdings B.V. 100% ordinary

BT Nederland N.V. 100% ordinary

BT Professional

Services Nederland B.V. 100% ordinary

Global Security Europe

Limited

 100% –

New Zealand

c/o Deloitte, Level 18, 80 Queen Street,

Auckland Central, Auckland, 1010, NewZealand

BT Australasia Pty

Limited – New Zealand

Branch

100% –

Nicaragua

De donde fué el Restaurante Marea Alta Ahora

quesillos, El Pipe, 2 cuadras al este, 10 Metros al

norte, frente al, Hotel El Gran Marquez, Casa #351,

Nicaragua, 2815, Nicaragua

BT Nicaragua S.A. 100% capital

Nigeria

Civic Towers, Plot GA1, Ozumba Mbadiwe

Avenue, Victoria Island, Lagos, Nigeria

BT (Nigeria) Limited 100% ordinary

Company name

Group

interest in

allotted

capital

class

North Macedonia

Str. Dame Gruev no.8, 5th floor, Building “Dom

na voenite invalidi”, Skopje 1000, North

Macedonia

BT Solutions Limited

Branch Office in

Skopje

100% –

Norway

Munkedamsveien 45, Oslo, 0121, Norway

BT Solutions Norway AS 100% ordinary

Oman

Maktabi Building, Building No. 458, Unit No. 413

4th Floor, Road No – R41, Block No. 203, Plot No.

107, Zone No. SW41, Complex No. 271, Al

Watiyah, Bausher, Muscat, Sultanate of Oman,

Oman

BT International

Holdings Limited & Co.

LLC 100% ordinary

Pakistan

Cavish Court, A-35, Block 7&8, KCHSU,

Shahrah-e-Faisal, Karachi, 75350, Pakistan

BT Pakistan (Private)

Limited 100% ordinary

Panama

50th and 74th Street, San Francisco, PH 909,

15th and 16th Floor, Panama City, Panama

BT de Panama, S.R.L. 100% ordinary

Paraguay

Av. Brasilia N° 767 casi Siria, Asunción,

Paraguay

BT Paraguay S.R.L. 100% quotas

Peru

Av. La Mar 662 Of. 201 – Miraflores, Lima, Peru

BT Peru S.R.L. 100% ordinary

Philippines

11th Floor, Page One Building, 1215 Acacia Ave

Madrigal Business Park, Ayala Alabang,

Muntinlupa, Metro Manila, 1780, Philippines

IT Holdings, Inc 100% ordinary

40th Floor, PBCom Tower 6795, Ayala Avenue

cor. Rufino St, Makati City, 1226, Philippines

BT Communications

Philippines

Incorporated 100% ordinary

c/o Sun Microsystems Phil Inc., 8767 Paseo de

Roxas, Makati City, Philippines

PSPI-Subic, Inc 51% ordinary

Poland

126/134 Marszalkowska St., Room 128, 00-008,

Warsaw, Poland

BT Poland Spółka Z

Ograniczoną

Odpowiedzialnością 100% ordinary

Portugal

Rua D. Francisco Manuel de Melo 21-1,

1070-085 Lisboa, Portugal

BT Portugal –

Telecomunicaçöes,

Unipessoal Lda 100% ordinary

Puerto Rico

Corporation Service Company Puerto Rico Inc., c/

o RVM Professional Services LLC, A4 Reparto

Mendoza, Humacao, 00791, Puerto Rico

BT Communications

Sales, LLC Puerto Rico

branch

100% –

Company name

Group

interest in

allotted

capital

class

Qatar

1413, 14th Floor, Al Fardan Office Tower, Doha,

31316, Qatar

BT Global Services

(North Gulf) LLC 49% ordinary

Republic of Ireland

BDO Block 3 Miesian Plaza, 50-58 Baggot

Street Lower, Dublin 2, Dublin, D02 Y754,

Ireland

BT Global

Communications

(Ireland) Limited 100% ordinary

5th Floor, 2 Grand Canal Plaza, Upper Grand

Canal Street, Dublin 4, Ireland

The Faraday

Procurement

Company Limited 100% ordinary

2 Grand Canal Plaza, Upper Grand Canal

Street, Dublin 4, Republic of Ireland

BT Communications

Ireland Limited 100% ordinary

BT Communications

Ireland Group Limited 100% ordinary

BT Communications

Ireland Holdings

Limited 100% ordinary

Whitestream Industries

Limited 100% ordinary

Romania

Cladirea A1, Biroul Nr. 52, Nr 35-37, Str.

Oltenitei, Sector 4, Bucharest, Romania

BT Global Services

Limited Londra

Sucursala Bucuresti

100% –

Russia

Room 62, prem xx, Floor 2, Pravdy, 26, 127137,

Moscow, Russian Federation

BT Solutions Limited

Liability Company 100% –

Serbia

Dimitrija Georgijevica Starike 20, Belgrade,

11070, Serbia

BT Belgrade d.o.o 100% ordinary

Sierra Leone

84 Dundas Street, Freetown, Sierra Leone

BT (SL) Limited 100% ordinary

Singapore

Level 3, #03-01/02 & #03-04, Block B,

Alexandra Technopark, 438B Alexandra Road,

Singapore, 119968

BT (India) Private

Limited Singapore

Branch

100% –

BT Global Solutions

Pte. Ltd. 100% ordinary

BT Singapore Pte. Ltd. 100% ordinary

Slovakia

Pribinova 10, 811 09, Bratislava , mestskó èast’

Staré Mesto, Slovakia

BT Global Europe B.V.,

o.z.

100% –

BT Slovakia s.r.o. 100% ordinary

Company name

Group

interest in

allotted

capital

class

BT Group plc Annual Report 2024

228 Financial statements

Related undertakings continued

Slovenia

Cesta v Mestni Log 1, Ljubljana, 1000, Slovenia

BT GLOBALNE

STORITVE,

telekomunikacijske

storitve, obdelava

podatkov, podatkovnih

baz; d.o.o. 100% ordinary

South Africa

BT Building, Woodmead North Office Park, 54

Maxwell Drive, Woodmead, Johannesburg,

2191, South Africa

BT Communications

Services South Africa

(Pty) Limited 100% ordinary

BT Limited

100% –

Spain

C/ María Tubau, 3, 28050 de Madrid, Spain

BT Global ICT Business

Spain SLU 100% ordinary

Sri Lanka

Level 03, No 11, Castle Lane, Colombo, 04, Sri

Lanka

BT Communications

Lanka (Private)

Limited 100% ordinary

Sudan

Alskheikh Mustafa Building, Parlman Street,

Khartoum, Sudan

Newgate

Communication

(Sudan) Co. Ltd 100% ordinary

Sweden

c/o 7A, Vasagatan 28, 111 20, Stockholm,

Sweden

BT Nordics Sweden AB 100% ordinary

Switzerland

Richtistrasse 5, 8304 Wallisellen, Switzerland

BT Switzerland AG 100% ordinary

Taiwan

11F, No. 1 Songzhi Rd, Xinyi Dist., Taipei City,

110411, Taiwan (Province of China)

BT Limited Taiwan

Branch

100% –

Tanzania

Region Dar Es Salaam, District Kinondoni, Ward

Msasani, Street Msasani Peninsula, Road 1 Bains

Singh Avenue, Plot number 1403/1, Ground Floor,

14111, United Republic of Tanzania

BT Solutions Limited –

Tanzania Branch

100% –

Thailand

No.63 Athenee Tower, 23rd Floor (CEO Suite,

Room No.38), Wireless Road, Kwaeng Lumpini,

Khet Pathumwan, Bangkok, 10330, Thailand

BT Siam

Communications Co.,

Ltd 49% class B

BT Siam Limited 69% ordinary

69% preference

Trinidad and Tobago

2nd Floor CIC Building, 122-124 Frederick Street,

Port of Spain, Trinidad and Tobago

BT Solutions Limited

100% –

Company name

Group

interest in

allotted

capital

class

Tunisia

Rue de I’, Euro Immeuble Slim, Block A-2nd

floor-Les berges du Lac, Tunis, 1053, Tunisia

BT Tunisia S.A.R.L 100% ordinary

Turkey

Acıbadem Mahallesi Çeçen Sk. Akasya A , Kule

Kent Etabı Apt. No: 25 A/28- , Üsküdar,

Istanbul, Turkey

BT Bilisim Hizmetleri

Anonim Şirketi 100% ordinary

BT Telekom Hizmetleri

Anonim Şirketi 100% common

Uganda

Engoru, Mutebi Advocates, Ground Floor,

Rwenzori House, 1 Lumumba Avenue, Kampala,

22510, Uganda

BT Solutions Limited

100% –

Ukraine

Office 702, 34 Lesi Ukrainky Boulevard, Kyiv

01042, Ukraine

BT Ukraine Limited

Liability Company 100% stakes

United Arab Emirates

Office No G03, Ground Floor, EIB Building No

04, Dubai, United Arab Emirates

BT MEA FZ-LLC 100% ordinary

Office no.206 BLOCK B, Diamond Business

Center 1, Al Barsha South Third, Dubai, P.O.

BOX 25205, United Arab Emirates

BT UAE Limited –

Dubai Branch (1)

100% –

BT UAE Limited –

Dubai Branch (2)

100% –

United Kingdom

1 Braham Street, London, E1 8EE, United

Kingdom

Autumnwindow

Limited 100% ordinary

Autumnwindow No.2

Limited 100% ordinary

Autumnwindow No.3

Limited 100% ordinary

Belmullet (IoM)

Limited

100% –

BPSLP Limited 100% ordinary

British

Telecommunications

plc 100% ordinary

Bruning Limited 100% ordinary

BT (International)

Holdings Limited 100% ordinary

BT (RRS LP) Limited 100% ordinary

BT Communications

Ireland Group Limited

– UK Branch

100% –

BT Corporate Trustee

Limited 100%

limited by

guarantee

BT European

Investments Limited 100% ordinary

BT Fifty-One 100% ordinary

BT Fifty-Three Limited 100% ordinary

BT Global Security

Services Limited 100% ordinary

BT Global Services

Limited 100% ordinary

BT Holdings Limited 100% ordinary

Company name

Group

interest in

allotted

capital

class

BT IoT Networks

Limited 100% ordinary

BT Limited 100% ordinary

BT Ninety-Seven

Limited 100% ordinary

BT Nominees Limited 100% ordinary

BT OnePhone Limited 100% ordinary

BT Property Holdings

(Aberdeen) Limited 100% ordinary

BT Property Limited 100% ordinary

BT Sixty-Four Limited 100% ordinary

BT SLE Euro Limited 100% ordinary

BT SLE USD Limited 100% ordinary

BT Solutions Limited 100% ordinary

BT UAE Limited 100% ordinary

Communications

Global Network

Services Limited – UK

Branch

100% –

Communications

Networking Services

(UK) 100% ordinary

EE (Group) Limited 100% ordinary

EE Group Investments

Limited 100% ordinary

EE Limited 100% ordinary

EE Pension Trustee

Limited 100% ordinary

ESAT

Telecommunications

(UK) Limited 100% ordinary

Extraclick Limited 100% ordinary

Global Security Europe

Limited 100% ordinary

Mainline

Communications

Group Limited 100% ordinary

Mainline Digital

Communications

Limited 100% ordinary

Newgate Street

Secretaries Limited 100% ordinary

Numberrapid Limited 100% ordinary

Orange Furbs Trustees

Limited 100% ordinary

Orange Home UK

Limited 100% ordinary

Orange Personal

Communications

Services Limited 100% ordinary

Radianz Limited 100% ordinary

Redcare Limited 100% ordinary

Southgate

Developments Limited 100% ordinary

Tudor Minstrel 100% ordinary

Alexander Bain House, 15 York Street, Glasgow,

Lanarkshire, G2 8LA, Scotland

BT Corporate Limited 99% ordinary

BT Falcon 1 LP 51 % –

Holland House

(Northern) Limited 100% ordinary

BDO LLP, 5 Temple Square, Temple Street,

Liverpool, L2 5RH, United Kingdom

BT Lancashire Services

Limited 100% ordinary

Company name

Group

interest in

allotted

capital

class

BT Group plc Annual Report 2024

229 Financial statements

Kelvin House, 123 Judd Street, London, WC1H

9NP, United Kingdom

Openreach Limited 100% ordinary

Endeavour, Sheffield Digital Campus,1a

Concourse Way, Sheffield, S1 2BJ, United

Kingdom

Plusnet plc 100% ordinary

United States

c/o Corporation Service Company, 251 Little Falls

Drive, Wilmington DE 19808, United States

BT Americas Holdings

Inc. 100% common

BT Americas Inc. 100% common

BT Communications

Sales LLC 100% units

BT Federal Inc. 100% common

BT Procure L.L.C. 100% units

BT United States L.L.C. 100% units

Infonet Services

Corporation 100% common

Uruguay

Rincón 487 Piso 11, Montevideo, ZIP CODE

11.000, Uruguay

BT Solutions Limited

Sucursal Uruguay

100% –

Venezuela

Calle Guaicaipuro, Urbanizacion El Rosal,

Municipio Chacao, Oficina 11B, Piso 11, Torre

Forum, Caracas, Venezuela

BT LatAm Venezuela,

S.A. 100% ordinary

Vietnam

16th Floor Saigon Tower, 29 Le Duan Road,

District 1, Ho Chi Minh City, 710000, Socialist

Republic of Vietnam

BT (Vietnam) Co. Ltd. 100% ordinary

Zambia

Plot No. 11058, Haile Selassie Avenue,

Zimbabwe, Lusaka, Lusaka Province, 34972,

Zambia

BT Solutions Limited

100% –

Zimbabwe

6th Floor, Goldbridge Eastgate, Sam Nujoma

Street Harare, Post Box 10400, Zimbabwe

Numberrapid Limited

100% –

Company name

Group

interest in

allotted

capital

class

Associates (note 24)

Company name

Group

interest in

allotted

capital

class

Held via other group companies

Mauritius

IFS Court, Bank Street, TwentyEight

Cybercity, Ebene, 72201, Mauritius

Mahindra – BT

Investment

Company

(Mauritius) Limited 43% ordinary

Philippines

32F Philam Life Tower, 8767 Paseo de

Roxas, Makati City, Philippines

ePLDTSunphilcox

JV, Inc 20% ordinary

SunPhilcox JV, Inc 20% ordinary

United Kingdom

24/25 The Shard, 32 London Bridge Street,

London, SE1 9SG, United Kingdom

Digital Mobile

Spectrum Limited 25% ordinary

10 Stadium Business Court , Millennium Way,

Pride Park , Derby, DE24 8HP, United

Kingdom

Midland

Communications

Distribution Limited 35% ordinary

Phoneline (M.C.D)

Limited 35% ordinary

2nd Floor, Aldgate Tower, 2 Leman Street,

London, E1 8FA, United Kingdom

Youview TV Limited 14% voting

Joint ventures (note 24)

Company name

Group

interest in

allotted

capital

class

Held via other group companies

United Kingdom

Chiswick Park Building 2, 566 Chiswick High

Road, London, W4 5YB, United Kingdom

TNT Sports

Broadcasting

Limited

50% ordinary

6th Floor, One London Wall, London, EC2Y

5EB, United Kingdom

Internet Matters

Limited 25% -

80 Fenchurch Street , London, EC3M 4AE,

United Kingdom

Rugby Radio

Station (General

Partner) Limited 50% ordinary

Rugby Radio

Station (Nominee)

Limited 50% ordinary

St Helen’s, 1 Undershaft, London, EC3P 3DQ,

United Kingdom

Rugby Radio

Station LP 50% -

All joint ventures are governed by a joint

venture agreement.

Joint operations

Company name

Group

interest in

allotted

capital

class

Held via other group companies

United Kingdom

450 Longwater Avenue, Green Park,

Reading, Berkshire, RG2 6GF, United

Kingdom

Mobile Broadband

Network Limited

50% ordinary

EE Limited and Hutchison 3G UK Limited

(together ‘the Companies’) each have a

50% share in the joint operation Mobile

Broadband Network Limited (‘MBNL’).

MBNL’s ongoing purpose is the operation

and maintenance of radio access sites for

mobile networks through a sharing

arrangement. This includes: (i) the efficient

management of shared infrastructure and

a 3G network on behalf of the Companies,

(ii) acquiring certain network elements for

shared use, and (iii) coordinating the

deployment of new sites, infrastructure

and networks on either a shared or a

unilateral basis (unilateral elements being

network assets or services specific to one

company only). The group is committed to

incurring 50% of costs in respect of

restructuring the shared MBNL network, a

broadly similar proportion of the operating

costs (which varies in line with usage), and

100% of any unilateral elements.

MBNL is accounted for as a joint operation.

Guarantees for the joint operation are

given by British Telecommunications plc

and CK Hutchison Holdings Limited.

The principal place of business of the joint

operation is in the UK.

a The proportion of voting rights held corresponds to the

aggregate interest in percentage held by the holding

company and subsidiaries undertaking.

b No shares issued for a branch.

c BT Ninety-Five Limited name changed to TNT Sports

Broadcasting Limited. In addition to the 50% ordinary

A shares we also hold A preference shares and C

preference shares, see note 24 for more details.

BT Group plc Annual Report 2024

230 Financial statements

Related undertakings continued

Alternative performance measures

Introduction

We assess the performance of the group using a variety of

alternative performance measures that are not defined under IFRS

and are therefore termed non-GAAP measures. The non-GAAP

measures we use are: adjusted revenue, adjusted operating costs,

adjusted finance expense, adjusted EBITDA, adjusted operating

profit, adjusted profit before tax, adjusted earnings per share,

return on capital employed, normalised free cash flow and net

debt. We also reference adjusted revenue and adjusted EBITDA on

a Sports JV pro forma basis. The rationale for using these

measures, along with a reconciliation from the nearest measures

prepared in accordance with IFRS, is presented below.

The alternative performance measures we use may not be directly

comparable with similarly titled measures used by other

companies.

Specific items

Our income statement and segmental analysis separately identify

trading results on an adjusted basis, being before specific items.

The directors believe that presentation of the group’s results in this

way is relevant to an understanding of the group’s financial

performance as specific items are those that in management’s

judgement need to be disclosed by virtue of their size, nature or

incidence.

This presentation is consistent with the way that financial

performance is measured by management and reported to the

Board and the Executive Committee and assists in providing an

additional analysis of our reporting trading results.

In determining whether an event or transaction is specific,

management considers quantitative as well as qualitative factors.

Examples of charges or credits meeting the above definition and

which have been presented as specific items in the current and/or

prior years include significant business restructuring programmes

such as the current group-wide cost transformation and

modernisation programme, acquisitions and disposals of

businesses and investments, impairment of goodwill, charges or

credits relating to retrospective regulatory matters, property

rationalisation programmes, historical property-related provisions,

significant out of period contract settlements, net interest on our

pension obligation, and the impact of remeasuring deferred tax

balances. In the event that items meet the criteria, which are

applied consistently from year to year, they are treated as specific

items. Any releases to provisions originally booked as a specific

item are also classified as specific. Conversely, when a reversal

occurs in relation to a prior year item not classified as specific, the

reversal is not classified as specific in the current year.

Movements relating to the sports joint venture (Sports JV) with

Warner Bros. Discovery (WBD), such as fair value gains or losses on

the A and C preference shares or impairment charges on the

equity-accounted investment as specific. Refer to note 24 for

further detail.

Details of items meeting the definition of specific items in the

current and prior year are set out in note 9.

Reported revenue, reported operating costs, reported operating

profit, reported net finance expense, reported profit before tax

and reported earnings per share are the equivalent IFRS measures.

A reconciliation from these can be seen in the group income

statement on page 145.

Net debt and net financial debt

Net debt consists of loans and other borrowings, lease liabilities

(both current and non-current) less current asset investments and

cash and cash equivalents, including items which have been

classified as held for sale on the balance sheet.

Amounts due to joint ventures, loans and borrowings recognised in

relation to monies received from the sale of cash flows of contract

assets and as prepayment for the forward sale of redundant

copper are excluded.

Currency-denominated balances within net debt are translated to

sterling at swap rates where hedged. Fair value adjustments and

accrued interest applied to reflect the effective interest method

are removed.

Net debt is a measure of the group’s net indebtedness that

provides an indicator of overall balance sheet strength. It is a key

indicator used by management to assess both the group’s cash

position and its indebtedness. The use of the term ‘net debt’ does

not necessarily mean that the cash included in the net debt

calculation is available to settle the liabilities included in this

measure.

As aligned with our normalised free cash flow metric, from FY24

onwards we exclude loans and borrowings recognised in relation

to:

– Asset monetisation programmes, in which monies received from

the sale of cash flows of contract assets are recorded as liabilities

(and the contract asset is not derecognised) until certain

performance obligations in the contract are fulfilled and the

right to consideration becomes unconditional. Excluding these

liabilities is considered to improve the relevance of the net debt

metric as it is consistent with the treatment of related cash flows

in normalised free cash flow as noted above; and aligns with the

underlying rationale and management’s view that substantially

all the risks and rewards associated with ownership of these

assets have been transferred to the end buyer. These liabilities

do not reflect the group’s indebtedness as they will be

extinguished upon the transfer of ringfenced operational cash

flows from end customers which management are confident will

be received.

– Monies received as prepayment for the forward sale of

redundant copper, which are recognised as liabilities until there

is physical delivery of the copper (further details in note 26).

Excluding these liabilities is again considered to improve the

relevance of the net debt metric by aligning with the treatment

of related cash flows in normalised free cash flow and the fact

that balances are not representative of the group’s true

indebtedness given that they will be settled by the physical

delivery of copper, rather than cash or any other financial asset.

Net financial debt is net debt excluding lease liabilities. It allows for

the comparison to net debt measures reported before the

introduction of IFRS 16 on 1 April 2019, and reflects a view that

lease liabilities are operational debt in substance, rather than

financing transactions.

Net debt and net financial debt are considered to be alternative

performance measures as they are not defined in IFRS. A

reconciliation from loans and other borrowings, lease liabilities,

cash and cash equivalents, and current asset investments, the most

directly comparable IFRS measures to net debt and net financial

debt, is set out in note 26.

BT Group plc Annual Report 2024

231 Financial statements

Additional information

Return on Capital Employed

We use a return on capital employed (ROCE) measure that serves

as an indicator of how efficiently we generate returns from the

capital invested in the business. It is a group KPI that is directly

relatable to the outcome of investment decisions.

ROCE represents the group’s returns as percentage of capital

employed.

Returns are defined as adjusted earnings before interest and tax.

We use an adjusted measure (before specific items) for the

reasons explained in the ‘specific items’ section above.

Capital employed represents equity, debt and debt-like liabilities.

We net the derivative financial instruments and cash and cash

equivalent balances that we use to manage financial risk against

gross debt, and exclude current and deferred tax balances as the

measure is determined on a pre-tax basis.

From FY24 we also exclude amounts due to joint ventures, loans

and borrowings recognised in relation to monies received from the

sale of cash flows of contract assets and as prepayment for the

forward sale of redundant copper. In line with the net debt

definition on page 231. In the table below we have restated the

FY23 comparative to align with the updated definition and

excluded £11m net loans from joint ventures, however it has not

changed the ROCE metric from the previously reported 8.3%.

While our long-term capital investment programmes such as our

full fibre rollout deliver value-creating long-term returns, they

suppress ROCE in the short- to medium-term.

The following table sets out the calculation of our ROCE measure.

In doing so it reconciles returns to operating profit, the most

directly comparable IFRS measure, and presents the components

of capital employed.

2024

2023

(restated)

Year ended 31 March £m £m

Reported operating profit for the

period

2,214 2,619

Share of post tax profits (losses) of

associates and joint ventures

(21) (59)

Specific items (non-finance and tax) 987 556

Return for the period 3,180 3,116

Equity, debt and debt-like

liabilities

Loans and other borrowings 18,526 18,521

Lease liabilities 4,955 5,359

Retirement benefit obligations 4,882 3,139

BDUK grant funding deferral 228 427

Total equity 12,518 14,514

Adjust for balances used to

hedge financial risk

Cash and cash equivalents (414) (392)

Investments (2,395) (3,577)

Net derivative financial instruments (531) (1,096)

Adjust for tax balances

Net deferred tax liabilities 485 911

Net current tax receivable (331) (349)

Adjust in line with net debt

definition

Net loans with joint ventures (11) (11)

Loans related to sale of contract

assets

(318) —

Loans related to the forward sale of

redundant copper

(106) —

Capital employed 37,488 37,446

Return on capital employed 8.5 % 8.3 %

Adjusted EBITDA

In addition to measuring financial performance of the group and

customer-facing units based on adjusted operating profit, we also

measure performance based on adjusted EBITDA. Adjusted

EBITDA is defined as the group profit or loss before specific items,

net finance expense, taxation, depreciation and amortisation and

share of post tax profits or losses of associates and joint ventures.

We consider adjusted EBITDA to be a useful measure of our

operating performance because it approximates the underlying

operating cash flow by eliminating depreciation and amortisation.

Adjusted EBITDA is not a direct measure of our liquidity, which is

shown by our cash flow statement, and needs to be considered in

the context of our financial commitments.

A reconciliation of reported profit for the period, the most directly

comparable IFRS measure, to adjusted EBITDA, is set out below.

2024 2023

Year ended 31 March £m £m

Reported profit for the period 855 1,905

Tax 331 (176)

Reported profit before tax 1,186 1,729

Net finance expense 1,007 831

Depreciation and amortisation,

including impairment charges

5,398 4,818

Specific revenue 38 (12)

Specific operating costs before

depreciation and amortisation

450 503

Share of post tax losses (profits) of

associates and joint ventures

21 59

Adjusted EBITDA 8,100 7,928

Normalised free cash flow

Normalised free cash flow is one of the group’s key performance

indicators by which our financial performance is measured. It is

primarily a liquidity measure. However, we also believe it is an

important indicator of our overall operational performance as it

reflects the cash we generate from operations after capital

expenditure and financing costs, both of which are significant

ongoing cash outflows associated with investing in our

infrastructure and financing our operations.

Normalised free cash flow is defined as free cash flow (net cash

inflow from operating activities after net capital expenditure) after

net interest paid, payment of lease liabilities, net cash flows from

the sale of cash flows related to contract assets, monies received

as prepayment for the sale of redundant copper, dividends

received from non-current asset investments, associates and joint

ventures, and net purchase or disposal of non-current asset

investments, before pension deficit payments (including their cash

tax benefit), payments relating to spectrum, and specific items. It

excludes cash flows that are determined at a corporate level

independently of ongoing trading operations such as dividends

paid, share buybacks, acquisitions and disposals, repayment and

raising of debt, cash flows relating to short-term funding

arrangements with joint ventures, and cash flows relating to the

Building Digital UK demand deposit account which have already

been accounted for within normalised free cash flow. For non-tax

related items the adjustments are made on a pre-tax basis.

As reflected above and communicated in our FY23 annual report,

from FY24 we have updated our normalised free cash flow metric

to reflect the ongoing evolution of the business:

– We include the sale of cash flows of contract assets related to

mobile handsets where the performance obligations have been

substantially delivered to the customer. This is a financing cash

flow in the cash flow statement as certain performance

obligations in the contract need to be fulfilled before the right to

consideration is unconditional. The underlying rationale for

entering into these transactions is however for the purpose of

working capital management as handset costs are incurred up

front but recovered throughout the customer contract term. We

BT Group plc Annual Report 2024

232 Financial statements

Additional information continued

therefore view the related cash flows as equivalent to working

capital cash flows internally, and consider that they should be

treated in the same way as operating cash inflows in our external

normalised free cash flow metric in order to provide the most

relevant information to the users of the financial statements. The

corresponding operating cash inflow received from customers is

excluded from normalised free cash flow if it has previously been

included at the time of the sale of the contract assets.

– We include monies received as prepayment for the forward sale

of future redundant copper. In the cash flow statement this will

be recorded within cash flows from investing activities as a

separate line item, and will be the only cash flow recognised in

respect of the transaction. We therefore consider it necessary to

include the inflow within normalised free cash flow to align with

the treatment of cash flows from all other purchases and

disposals of property, plant and equipment.

Normalised free cash flow is not a measure of the funds that are

available for distribution to shareholders.

A reconciliation from cash inflow from operating activities, the

most directly comparable IFRS measure, to free cash flow and

normalised free cash flow, is set out below.

2024 2023

Year ended 31 March £m £m

Cash generated from operations

6,012 6,588

Tax paid

(59) 136

Net cash inflow from operating activities

5,953 6,724

Net purchase of property, plant and

equipment and intangible assets

(4,967) (5,307)

Free cash flow

986 1,417

Interest received

140 41

Interest paid

(865) (709)

Payment of lease liabilities

(748) (727)

Dividends received from joint ventures,

associates and investments

20 9

Net purchase of non-current asset

investments

— (5)

Add back pension deficit payments

823 994

Add back net cash flow from specific

items

439 404

Net cashflows from sale of contract

assets related to handsets

305 —

Cash flows relating to the BDUK demand

deposit account

75 (96)

Prepayment for forward sale of copper

105 —

Normalised free cash flow

1,280 1,328

a Includes £247m outflow (FY23: £259m inflow) related to utilisation of a supply chain

financing programme; year on year cash outflow of £506m.

Below we reconcile normalised free cash flow by unit:

2023

2024 (re-presented)

Year ended 31 March £m £m

Consumer 1,023 963

Business 431 648

Openreach 590 219

Other (764) (502)

Normalised free cash flow 1,280 1,328

a Comparatives for the year ended 31 March 2023 have been re-presented for the

impact of the creation of our Business customer-facing unit and a change in the

methodology used to allocate shared central costs. For more information see note 1,

and for a bridge to prior period published financial information see note 32.

Sports JV pro forma basis

On 3 September 2022 BT Group and Warner Bros. Discovery

announced completion of their transaction to form a 50:50 sports

joint venture (Sports JV) combining the assets of BT Sport and

Eurosport UK. On 18 October 2022 we published unaudited pro

forma financial information estimating the impact on the group as

if trading in relation to BT Sport had been equity accounted for in

previous periods, akin to the Sports JV being in place historically.

Within this annual report we reference pro forma information

relating to the prior year ended 31 March 2023. The table below

provides a bridge between financial information on a reported

basis and a Sports JV pro forma basis (reported basis re-

presented, see note 32).

Reported

basis (re-

presented,

see note 32)

Sports JV pro

forma

adjustment

Sports JV pro

forma basis

2023 2023 2023

Year ended 31 March

£m £m £m

Adjusted revenue

Consumer 9,737 (238) 9,499

BT Group 20,669 (238) 20,431

Adjusted EBITDA

Consumer 2,469 71 2,540

BT Group 7,928 71 7,999

Normalised free cash flow

Consumer 963 123 1,086

BT Group 1,328 — 1,328

BT Group plc Annual Report 2024

233 Financial statements

Certain information included in this Annual Report and Accounts is

forward looking and involves risks, assumptions and uncertainties

that could cause actual results to differ materially from those

expressed or implied by forward looking statements. Forward

looking statements cover all matters which are not historical facts

and include, without limitation, projections relating to results of

operations and financial conditions and the Company’s plans and

objectives for future operations. Forward looking statements can

be identified by the use of forward looking terminology, including

terms such as ‘believes’, ‘estimates’, ‘anticipates’, ‘expects’,

‘forecasts’, ‘intends’, ‘plans’, ‘projects’, ‘goal’, ‘target’, ‘aim’, ‘may’,

‘will’, ‘would’, ‘could’ or ‘should’ or, in each case, their negative or

other variations or comparable terminology. Forward looking

statements in this Annual Report and Accounts are not guarantees

of future performance. All forward looking statements in this

Annual Report and Accounts are based upon information known to

the Company on the date of this Annual Report and Accounts.

Accordingly, no assurance can be given that any particular

expectation will be met and readers are cautioned not to place

undue reliance on forward looking statements, which speak only at

their respective dates. Additionally, forward looking statements

regarding past trends or activities should not be taken as a

representation that such trends or activities will continue in the

future. Other than in accordance with its legal or regulatory

obligations (including under the UK Listing Rules and the

Disclosure Guidance and Transparency Rules of the Financial

Conduct Authority), the Company undertakes no obligation to

publicly update or revise any forward looking statement, whether

as a result of new information, future events or otherwise. Nothing

in this Annual Report and Accounts shall exclude any liability under

applicable laws that cannot be excluded in accordance with

suchlaws.

BT Group plc Annual Report 2024

234 Financial statements

Cautionary statement regarding forward-looking

statements

BT Group plc Annual Report 2024

235 Financial statements

Notes

BT Group plc Annual Report 2024

236 Financial statements

Notes

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BT Group plc

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